Wall Street rose moderately today after the government reported a larger-than-expected increase in orders for big-ticket manufactured goods...

Share story

NEW YORK — Wall Street rose moderately today after the government reported a larger-than-expected increase in orders for big-ticket manufactured goods that indicated the economy is stronger than expected. Stocks pulled off their steepest gains late in the session on light trading, which tends to exaggerate price moves.

The Dow Jones industrial average rose 89.64 to 11,502.51 after advancing more than 140 points earlier in the session.

Microsoft, one of the 30 Dow stocks, added 29 cents to close at $27.56 a share. Boeing, also a Dow stock, gained $1.06 to $64.52.

Broader stock indicators also rose. The Standard & Poor’s 500 index gained 10.15 to 1,281.66 and the Nasdaq composite index rose 20.49 to 2,382.46.

Trading was light ahead of the long Labor Day weekend; low volumes tend to skew the market’s moves.

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 increase expected by economists surveyed by Thomson/IFR.

Durable goods, which also include cars, appliances and machinery, are under scrutiny not only because they reflect business spending, but because they are also an indicator of consumer confidence. The July increase equaled a 1.3 percent rise in June; both months produced the strongest gains since a 4.1 percent leap back in December.

“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.”

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

Stocks ended mixed Tuesday as what was then Hurricane Gustav sent oil prices higher and offset a better-than-expected reading on consumer confidence.

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.

Schweitzer noted 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.

“The weakness in the dollar and the strength in U.S. exports are acting like a bit of an automatic stabilizer for the U.S. economy,” he said. “It’s a key offset at a time when other things are not so good.”

Mark Coffelt, portfolio manager at Empiric Funds in Austin, Texas, cautioned against reading too much into the durable goods report and said economic readings will likely continue to come in mixed. He predicts volatility also will likely continue as investors thumb through a list of concerns ranging from the financial sector, to housing to energy costs.

“I think what we see is a lot of confusion right now. I’m not sure investors really know what to do. You’ve got oil jumping all over the place,” he said.

Rising energy prices curtailed stocks’ advance in early trading but investors eventually set aside some of their concerns. They appeared cheered by a prediction from Atlanta Federal Reserve President Dennis Lockhart, who said in a speech he expects that overall inflation and so-called core inflation, which excludes often volatile food and energy prices, will diminish through the rest of the year and into 2009.