US Stocks Within Striking Distance Of Multiyear High

U.S. stocks moved to within striking distance of a multiyear high, buoyed by solid manufacturing reports around the globe.

The Dow Jones Industrial Average climbed 122 points, or 1%, to 12754, in late Wednesday trading, a day after indexes notched their strongest January gains in more than a decade. The Dow is within 70 points of overtaking last year's peak, enough to put the blue-chip index at its highest level since May 2008.

The Standard & Poor's 500-stock index rose 15 points, or 1.2%, to 1328, and the Nasdaq Composite advanced 36 points, or 1.3%, to 2850.

All 10 S&P 500 sectors traded in positive territory, with the gains led by financial and industrial stocks. Bank of America rose 3.6% to top the Dow components. United Technologies gained 2.4% and Caterpillar, which has seen its 22% surge this year account for one-third of the Dow's gains this year, added another 1.7%. Technology stocks were also vibrant, as Hewlett-Packard rose 3%.

The gains were driven by signs that U.S. employment gains and global manufacturing are sustaining their recent strength. The U.S. added 170,000 new private-sector jobs in January, in line with economists' expectations, though the previous month's total was revised lower. The reading is seen as a preview to the closely watched government employment report due Friday.

Separately, a reading on U.S. manufacturing came in at 54.1 for January, a touch below expectations but better than December's revised reading of 53.1. Construction spending, however, jumped 1.5% in December, better than expectations for a 0.5% rise.

In Europe, the Stoxx Europe 600 finished with a climb of 2%, and Germany's DAX index gained 2.4% after purchasing managers indexes rose in the euro zone, Germany and the U.K. Both of those stock indexes closed at their highest level since last August.

"Investors who were incorrectly bearish on equities are now coming in and recognizing that stocks may have some value here," said Michael Strauss, chief economist and chief investment strategist at Commonfund in Wilton, Conn. "Since early September, an overwhelming number of the economic releases have been on the stronger side of expectations or better than the prior period ... and the market is reassessing towards a slightly rosier economic view."

Even so, skepticism remains high. In a report to clients Wednesday, Bank of America-Merrill Lynch noted that Wall Street sentiment towards stocks had fallen to a two-and-a-half-year low. According to the report, Wall Street strategists are steering investors away from stocks at a level rarely seen in the past 15 years.

John Buckingham, chief investment officer at Al Frank Asset Management in Aliso Viejo, Calif., said that in spite of a 20% rally off the market's October lows, investors continue to remain wary of stocks. Buckingham, who has taken conservative positions in less economically-sensitive stocks, is now preparing for the prospect that even a relatively modest gain in optimism could send investors into much riskier positions.

He mentioned Mitt Romney's commanding victory in Florida's Republican primary vote, potentially clarifying and stabilizing the Republican race, as well as possible plans for Facebook to file for a public listing Wednesday.

"The herd has moved so far in one direction that I don't think it takes a lot to move the herd in the other direction--all you need is for Europe and the economy to not be as much of a disaster, and then you'll have clients wondering why money managers missed a 20% rally off the low," Buckingham said.

Gold futures edged up 0.5% to $1,747.10 a troy ounce, an 11-week high, while crude-oil prices slipped to below $98 a barrel. The dollar fell against the euro and yen. Demand for Treasurys fell, sending the yield on the 10-year note to 1.8485%, from 1.799% late Tuesday.

In corporate news, Amazon.com slumped 8% after the online retailer reported better-than-expected fourth-quarter earnings but fell short on revenue. In addition, the company indicated that it could post an operating loss for this quarter, and provided a revenue outlook that was below analyst forecasts.

The European Commission blocked the merger between NYSE Euronext and Deutsche Borse, citing concerns that a combination would create a "quasimonopoly" in derivatives trading. The decision had been expected. NYSE's stock slipped 0.4%, while rival Nasdaq OMX Group gained 0.2% after fourth-quarter earnings and revenue topped forecasts.

Whirlpool surged 16% to lead the S&P 500 gainers after the appliance maker cut costs and saw improved sales activity in North America, which helped offset softer sales globally. Whirlpool also issued a higher earnings forecast than expected.

Broadcom jumped 7.7% after the semiconductor maker reported fourth-quarter results that exceeded estimates and announced an 11% increase in its quarterly dividend to 10 cents a share.

AOL soared 9.7% after fourth-quarter earnings and revenue beat estimates.

Hershey gained 0.7% after the candy maker matched fourth-quarter earnings estimates and raised its quarterly dividend 10%, to 38 cents a share.

Aflac edged up 0.3% after the insurance provider reported fourth-quarter earnings that fell short of expectations, even as revenue beat estimates, and provided a downbeat outlook for 2012 earnings.

Seagate Technology rallied 20% after the disk-drive maker's fiscal second- quarter earnings came in well above forecasts.

Medivation ran up 23% after the company and its partner announced positive results from a Phase III trial of an investigational drug for the treatment of prostate cancer.

 (END) Dow Jones Newswires 02-01-121550ET Copyright (c) 2012 Dow Jones & Company, Inc.