Stocks Higher Despite Weak Economic Data

A late-session buying spurt gave stocks a moderate lift Tuesday as investors managed to overcome their disappointment over troubling readings on consumer confidence and manufacturing.

But with trading volume remaining at low levels, though up from Monday’s activity, analysts said it was difficult to view the upturn as significant.

A plunge in the Conference Board’s consumer confidence index, which fell to 98.2 in August from 105.7 in July, kept stocks lower for much of the day and raised concerns on Wall Street that a lack of new jobs could extend the summer’s economic slowdown through the third quarter, or perhaps longer. A separate report on Midwest manufacturing activity indicated a sharp deceleration in output for the month.

The sour economic news pushed Treasury bond yields to near five-month lows. The yield on the benchmark 10-year note sank to 4.11%, down from 4.18% on Monday. Bond markets had been expected to be stagnant this week before Friday’s August payroll report and the Labor Day weekend, but Tuesday’s economic reports forced traders back into the fray.

A continuing decline in oil prices encouraged stock buyers at the end of Tuesday’s session. Near-term crude oil futures in New York dipped 16 cents to $42.12 a barrel, the seventh decline in eight sessions.

Still, the market’s turnaround was probably exaggerated by the light turnover; many investors are out of the market entirely with the Republican National Convention in New York this week.

“It’s hard to make anything out of this rise with the light trading we’re in right now,” said Brian Pears, head equity trader at Victory Capital Management. “No matter how you look at it, the economic numbers weren’t good. We’re really going to need to see evidence that this summer was a soft spot and not something prolonged.”

The Dow Jones industrial average was up 51.40 points, or 0.5%, at 10,173.92.

Broader stock indicators were higher as well. The Standard & Poor’s 500 index gained 5.09 points, or 0.5%, to 1,104.24, and the Nasdaq composite index was up 1.61 points, or 0.1%, at 1,838.10.

Advancing issues outnumbered decliners by more than 2 to 1 on the New York Stock Exchange.

For the month, the Dow rose 0.3% and the S&P; edged up 0.2%. Nasdaq was down 2.6%.

The consumer confidence index reading fell far below the 103.5 expected by Wall Street and, because consumers were focused on jobs, put even more of a focus on the August employment report due Friday.

The government’s payroll figures have been disappointing Wall Street all summer; another lackluster number would probably recast the economy’s recent slowdown as a larger and more disturbing trend, analysts said.

The Chicago purchasing managers index, a measure of manufacturing activity in the Midwest, also fell below expectations, coming in at 57.3 in August, down from 64.7 in July and worse than the 60.8 forecast by economists. The Chicago purchasing index is considered a harbinger of the national manufacturing report to be issued today by the Institute for Supply Management.

“We’re starting to see some reinforcement in the economic data that this is more than just a soft patch for the economy,” said Michael Chren, senior director of value equity investment for Armada Funds. If Friday’s jobs figure is lower than expected, “that will really throw fuel on the fire,” he said.

Among Tuesday’s market highlights:

* Energy-related companies led the gain in the S&P; 500 after Merrill Lynch said offshore drilling companies including Transocean, Noble and GlobalSantaFe would post steady earnings growth. Transocean rose 88 cents to $30.70, Noble advanced $1.30 to $40.22 and GlobalSantaFe added $1.12 to $27.88.

* Bank stocks rallied as bond yields fell. East West Bancorp rose 70 cents to $36.23, Golden West Financial gained $1.88 to $108.23 and JP Morgan Chase was up 48 cents to $39.58.

* Technology shares were under pressure from downbeat analyst comments about chip companies -- including a reduced expectation by Morgan Stanley of Intel’s third-quarter sales forecast, slated for Thursday.

Intel fell 31 cents to $21.29. Texas Instruments lost 17 cents to $19.54, Broadcom eased 34 cents to $27.14 and Altera fell 16 cents to $18.92.