Factory data gives boost to US stocks

US stocks rose for a third straight session yesterday with financial stocks leading gains after US manufacturing data and a rebound in Chinese stocks reassured investors.<br /><br />The Dow and the S&amp;P 500, which suffered their worst day in about seven weeks on Monday, got a lift from signs of improvement in US Mid-Atlantic manufacturing and China&rsquo;s stock market reversing its 20 per cent drop in the last two weeks. The S&amp;P 500 is now up about 49 per cent from its 12-year closing low set on 9 March.<br /><br />The positive manufacturing data from the Federal Reserve Bank of Philadelphia offset the market&rsquo;s disappointment that weekly jobless claims increased for a second week.<br /><br />&ldquo;Just the fact that the more important jobless claims were overshadowed by the manufacturing data and rebound overseas shows how much optimism there is in the market now,&rdquo; said Dan Faretta, a senior market strategist at Lind-Waldock.<br /><br />Financial stocks contributed the most to the market&rsquo;s rise, with Citigroup up 8.5 per cent at $4.48 after veteran bank analyst Richard Bove said some investors are betting the stock&rsquo;s price will triple in three years.<br /><br /><strong>AIG</strong> surged 21.3 per cent to $32.30 after newly appointed chief executive Robert Benmosche said the bailed-out insurer may be able to repay its federal debts and boost value for shareholders.<br /><br />&ldquo;Investors see financials as having been beaten down too bad, too fast ... They link financial stocks with economic recovery, so they want to see the shares move higher.&rdquo;<br /><br />The Dow Jones industrial average gained 70.89 points, or 0.76 per cent, to end at 9,350.05. The Standard &amp; Poor&rsquo;s 500 Index .SPX rose 10.91 points, or 1.09 per cent, to finish at 1,007.37. The Nasdaq Composite Index climbed 19.98 points, or 1.01 per cent, to close at 1,989.22.<br /><br />The S&amp;P Financial Index was up 2.60 per cent, widely outperforming other sectors, and the KBW Bank index gained 2.87 per cent.<br /><br />The US earnings picture was mixed as packaged food makers <strong>HJ Heinz</strong> and <strong>Hormel Foods</strong> both beat Wall Street&rsquo;s estimates.