Stocks rise after mixed economic data

NEW YORK -- The third quarter is starting on a positive note after a mixed bag of economic data.

Major stock indexes were up nearly 1% Wednesday following a report showing more stable manufacturing activity in the United States. Investors also appeared pleased about a fourth straight monthly rise in pending home sales in May. European markets had risen earlier following similarly upbeat data on manufacturing in that region.

Some of Wednesday's bounce, though, may simply be due to stocks appearing cheaper following a big sell-off Tuesday and as investors look to put money to work as the new quarter begins.

Stocks had dropped Tuesday on a disappointing drop in consumer confidence but still ended the second quarter with significant gains, giving the S&P 500 index its best quarter in a decade.

"Some of the buying that wasn't done yesterday is being done today," said Richard Cripps, chief market strategist for Stifel Nicolaus. "I'm a little surprised. There isn't a lot of convincing volume here to read too much into this."

Not all the new economic data was upbeat. Construction spending fell in May by more than the market expected, and the private sector lost more jobs in June than anticipated. The most anticipated report of the week will come on Thursday, when the Labor Department releases its June jobs report.

Scott Fullman, director of derivatives investment strategy for WJB Capital Group, said the employment report — along with thin, pre-holiday trading volumes — could make for a volatile market Thursday. U.S. markets are closed Friday in observance of the Independence Day holiday.

Nonetheless, investors remain optimistic that the economy will be in better shape by the end of the year. "The belief is the worst is behind us," Fullman said.

Bond prices were mixed on Wednesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.55% from 3.54% late Tuesday.