NEW YORK — Wall Street posted a big advance after the government reported a larger-than-expected increase in orders for big-ticket manufactured goods that indicated the economy is stronger than many investors thought.
The Commerce Department said orders for durable goods jumped 1.3 percent in July compared with the previous month, led by a big gain in demand for commercial aircraft. That was well above the 0.1 percent increase expected by economists surveyed by Thomson/IFR.
Durable goods, which also include cars, appliances and machinery, are under scrutiny because they reflect business spending and are an indicator of consumer confidence. The July increase matched a 1.3 percent rise in June; both months produced the strongest gains since a 4.1 percent leap in December.
Light, sweet crude rose $1.88 to settle at $118.15 per barrel on the New York Mercantile Exchange on worries that Tropical Storm Gustav might hit Gulf of Mexico installations.
“The strength in durable goods is just the latest indication that manufacturing is actually holding in quite well and that’s a really big plus,” said Stuart Schweitzer, global markets strategist at J.P. Morgan’s Private Bank. “Against the backdrop of the drumbeat of negative news of the last several weeks it was encouraging to see a little bit of positive news. The basic fact of the matter is that although the economy has been weak, it hasn’t fallen off a cliff.”
The Dow Jones industrial average rose 89.64, or 0.79 percent, to 11,502.51.
Broader stock indicators also rose. The Standard & Poor’s 500 index gained 10.15, or 0.80 percent, to 1,281.66, and the Nasdaq composite index rose 20.49, or 0.87 percent, to 2,382.46.
Trading was light ahead of the long Labor Day weekend; low volumes tend to skew the market’s moves.
Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.77 percent from 3.78 percent late Tuesday. The dollar was mixed against other major currencies, while gold prices rose.
Schweitzer said the relative strength of the manufacturing sector, fed in part by a weak dollar that makes U.S. goods less expensive abroad, is helping undergird the overall economy.
“It’s a key offset at a time when other things are not so good,” he said.
