Stocks start September with 2%-plus surge

U.S. stocks rose the most in almost two months as better-than-estimated growth in American and Chinese manufacturing bolstered confidence in the global economic recovery. Caterpillar Inc. helped lead industrial companies to a 3.6 percent gain as manufacturing grew at a faster pace last month in China and the U.S. Alcoa Inc., the largest U.S. aluminum producer, advanced 3.1 percent as metal prices gained. Apple Inc. rose 3.3 percent before introducing an updated version of its TV set-top box with programming from Netflix Inc. Burger King Holdings Inc. surged 15 percent on a report the fast-food chain may get a buyout offer. The Standard & Poor's 500 Index climbed 2.8 percent to 1,078.36 at 12:16 p.m. in New York, heading for the biggest gain since July 7. The Dow Jones Industrial Average advanced 247.33 points, or 2.5 percent, to 10,262.05. “We got good economic news on the manufacturing side and on the employment side,” said Michael Binger, a Minneapolis- based fund manager at Thrivent Asset Management, which oversees about $70 billion. “There's a sigh of relief among the long- only funds and the short-sellers are saying that maybe the sell- off is over. That's why we get this explosion in the market after the mostly negative economic data from the U.S. throughout the summer.” The S&P 500 dropped 4.7 percent last month amid growing concern the economic rebound was stalling. The benchmark for U.S. stocks is trading at less than 12.6 times forecast earnings of its companies, near the lowest valuation since March 2009. September is historically the worst month for stocks with the S&P 500 falling 0.7 percent and the Dow dropping 1 percent on average since 1950, according to the Stock Trader's Almanac. Manufacturing Expansion Caterpillar, the world's largest maker of construction equipment, jumped 5.2 percent to $68.51, leading industrial stocks to the biggest gain among 10 industry groups in the S&P 500 as the Institute for Supply Management's factory index unexpectedly rose to 56.3 in August from 55.5 in July. The median estimate of 78s economist surveyed by Bloomberg News forecast the measure would fall to 52.8. Readings above 50 signal growth. U.S. futures joined a global advance in equities after China's purchasing managers' index rose to 51.7 from 51.2, exceeding forecasts, according to a government-backed report. A separate PMI released by HSBC Holdings Plc and Markit Economics gained to 51.9 from 49.4. In Australia, gross domestic product advanced 1.2 percent from a revised 0.7 percent in the first quarter. That beat the median economist estimate for a 0.9 percent gain, Bloomberg data show. Bull Market Since the beginning of the bull market in March 2009 there have been 10 other days when S&P 500 futures were up more than 1 percent at 8 a.m. and the market has ended the day higher 80 percent of the time, with the S&P 500 averaging a 1.7 percent gain, according to research from Birinyi Associates Inc., the Connecticut-based research and investment firm founded by Laszlo Birinyi. Futures maintained gains even after ADP Employer Services said companies in the U.S. unexpectedly cut 10,000 workers in August. The median estimate of 35 economists surveyed by Bloomberg was for a gain of 15,000. Another report from outplacement firm Challenger, Gray & Christmas Inc. showed job cuts announced by U.S. employers fell 55 percent to 34,768 last month from August 2009. ‘Tips the Scale' "The data tips the scale away from a recessionary outcome," Myles Zyblock, the Toronto-based chief institutional strategist at Royal Bank of Canada, wrote in a note to clients today. "The ISM release is also a first step in the right direction for adding portfolio risk." Barton Biggs holds a "fair amount of risk" in his Traxis Partners LLC fund, he said on Bloomberg Television yesterday. Traxis gained 38 percent in 209 after Biggs bought shares as the S&P 500 fell to a 12-year low in March. Economists project in two days that a Labor Department report will show companies may have added 42,000 workers to their payrolls in August. The average from May through July was 51,000 jobs, down from 200,000 in the previous two months. Alcoa, Freeport-McMoRan Alcoa increased 3.1 percent to $10.53 and Freeport-McMoRan Copper & Gold Inc. surged 5.8 percent to $76.13. Copper climbed to a four-month high in New York. Aluminum, nickel and other metals also gained on the manufacturing reports from the U.S. and China, the world's largest metal users. Exxon Mobil Corp., the world's largest oil company, climbed 2.3 percent to $60.48. Chevron Corp., the second-largest U.S. energy producer, increased 2.8 percent to $76.15. Crude oil rebounded from its lowest level in a week as a declining dollar and rising equity markets in Europe tempered concern that U.S. fuel supplies are excessive. Apple advanced 3.3 percent to $250.99. The company, hosting an annual event on music and media, will introduce a version of its TV set-top box that will include programming from Netflix, according to people familiar with the product. Netflix shares advanced 4.8 percent to $131.60. Amazon.com Inc. rose 4.9 percent to $130.97. The Web retailer has approached media companies including Time Warner Inc. with plans to start an online video-subscription service to rival Netflix, according to people with knowledge of the talks. Burger King surged 15 percent to $18.95. The fast-food chain is in talks with buyout firms about a possible sale, the Wall Street Journal reported, citing unidentified people familiar with the matter. 3i Group Plc isn't among the groups in talks with Burger King, according to a spokeswoman with the private-equity firm. Eli Lilly & Co. gained 1.8 percent to $34.19. The world's biggest maker of psychiatric drugs won a court order banning sales of generic versions of the attention-deficit treatment Strattera until a patent appeal is decided. Rowan Cos. rose 8.7 percent to $27.94 for the biggest gain in the S&P 500. The oil and natural gas driller that builds its own rigs signed a pair of three-year contracts with Saudi Arabia's state oil company.