Major stock indexes wavered in early trading Tuesday, then moved decisively higher after the government reported that factory orders rose in May. Caterpillar, Alcoa, Boeing and other stocks that depend on manufacturing rose.
NEW YORK (AP) — Stocks climbed Tuesday in an abbreviated holiday trading session after an encouraging report about manufacturing. Energy stocks rose the most because of increased tension over oil-rich Iran.
Major stock indexes wavered in early trading, then moved decisively higher after the government reported that factory orders rose in May. Caterpillar, Alcoa, Boeing and other stocks that depend on manufacturing rose.
The report was welcome after a trade group reported on Monday that U.S. manufacturing shrank in June for the first time since July 2009, the first month after the Great Recession ended.
The price of oil climbed more than 4 percent after Iran threatened to block a critical Persian Gulf shipping route. On Sunday, Europe enacted stricter rules against buying oil from Iran, trying to force it to be more open about its nuclear program.
New York crude rose $3.91 per barrel to $87.66. The supply fears drove energy stocks up more than 2 percent, more than any other industry in the Standard & Poor’s 500. Chevron rose $1.51, or 1.4 percent, to $107.37.
The Dow Jones industrial average finished 72.43 points higher at 12,943.82. The S&P 500 index rose 8.51 to 1,374.02. The Nasdaq composite index rose 24.85 to 2,976.08.
Brian Jacobsen, chief portfolio strategist at Wells Fargo Fund Management, was investing in energy companies – not just oil but also natural gas. He figures that as the price of oil rises, more businesses will explore natural gas as an alternative.
“Like it or not,” Jacobsen said, “we’re dependent on a variety of energy sources.”
Ford and General Motors both jumped after they and other car companies reported higher sales for June. Overall car sales still came in slightly below what analysts polled by FactSet were expecting.
Factory orders increased 0.7 percent in May from April, the Commerce Department said. Core capital goods, which include machinery and computers, rose 2.1 percent. That was better than the 1.6 percent estimated last week.
“Not much was expected, and it managed to come in just above ‘not much,'” said Patrick O’Keefe, director of economic research at J.H. Cohn.
O’Keefe said he keeps waiting for the U.S. economy to turn a corner but hasn’t seen it yet. “We’re still getting growth, and that was expected,” he said, “but it’s growth that is both weak and erratic.”
Mostly, investors were in a holding pattern, waiting for the government’s Friday report on June employment, and for companies to start reporting second-quarter earnings next week.
Trading volume was light. The market closed three hours early, at 1 p.m., and many traders had already taken off for the Fourth of July holiday.
Europe was relatively quiet, though with underpinnings of discord. A Greek government spokesman said the government was preparing an “alarming” report on its recession in a bid to renegotiate the terms of its bailout.
Slovakia’s prime minister said his country was running out of patience for bailing out its more free-spending neighbors. Cyprus opened talks with the European Union and the International Monetary Fund on a bailout for its troubled banks.
The European Central Bank will announce later this week whether it will cut interest rates, a move that would likely drive markets higher but also signal that Europe’s economy is still weak. Major indexes in France, Britain, Germany, Spain and Greece rose.