Signs of healing in manufacturing lift stocks

NEW YORK -- The stock market is extending its summer rally as August brings more upbeat economic data.

Positive reports on manufacturing, housing and banking sent stocks sharply higher Monday, hurling the Standard & Poor's 500 index past 1,000 for the first time since early November. All the major indexes rose more than 1%.

The gains were spread across industry groups. The manufacturing data and rising commodity prices helped to lift energy and material stocks, while stronger earnings reports from European banks lifted shares of financial companies.

Ford hit a new high for the year as the company's sales rose for the first time in nearly two years. The federal government's popular "cash-for-clunkers" program is expected to boost overall auto sales to their highest level of the year.

The market had already started off on a positive note following reports showing stronger industrial activity in China, Britain and Europe.

Stocks surged last month, reigniting a spring rally that had fizzled in June amid growing doubts that the economy was on solid footing. The Dow Jones industrials recorded its best July in 20 years, soaring 725 points, or 8.6%. Stocks regained momentum as an increasing number of economic and corporate earnings reports suggested investors' bets had been well-founded.

"At this point through earnings season, patterns have been firmly established," said Lawrence Creatura, portfolio manager at Federated Clover Investment Advisors. "It would take a lot to derail the emerging optimism."

In other signs of investors' growing confidence, safe-haven assets like Treasurys and the U.S. dollar fell, while oil and other commodities prices surged.

The market was pleased by a report showing that manufacturing activity slowed during July at the slowest pace in nearly a year.

The Institute for Supply Management said its manufacturing index rose to a better-than-expected 48.9 from 44.8 in June. A reading above 50 indicates growth.