Traders Book Day’s Gains, Blunting a Rally Set Off by Encouraging Economic Data

Stocks climbed on Monday, the first day of the third quarter, supported by signs of strength in the manufacturing and construction sectors. Even so, the major stock indexes pulled back from their session highs late in the day as investors sold some shares to book profits.

The Standard Poor’s 500-stock index closed up 0.54 percent after jumping as much as 1.27 percent earlier in the day. But the gains followed the S. P.’s rally of 12.6 percent in the first six months of 2013, which is the strongest first half of a year since 1998 for the benchmark.

“We’ve had a couple days of pretty good moves, and on Friday and today, you’ve had some intraday profit-taking,” said Richard Meckler, president of the hedge fund LibertyView Capital Management, in Jersey City, N.J.

Wall Street showed signs of stabilization last week after a sell-off that began because of concerns that the Federal Reserve’s bond-buying policy would end sooner than expected. June was the S. P. 500’s first negative month since October.

Among the S. P. 500’s 10 industrial sectors, the telecommunication and utilities sectors were the decliners of the day. The S. P.’s telecommunication sector index slipped 0.1 percent, and its utilities sector index lost 1.3 percent.

The day’s early rally was brought on by data from the Institute for Supply Management that showed that American manufacturing activity grew in June, rebounding from an unexpected contraction in May.

The Dow Jones industrial average rose 65.36 points, or 0.44 percent, to close at 14,974.96. The S. P. 500 advanced 8.68 points, or 0.54 percent, to finish at 1,614.96. The Nasdaq composite index gained 31.24 points, or 0.92 percent, to end at 3,434.49.

While fears about the Fed’s early exit from its stimulus efforts have calmed for now, analysts said the transition to a no-stimulus environment could cause further volatility.

“I still believe the market is trying to figure out how to price in slightly higher interest rates, even if rate increases from the Federal Reserve are still at least a year away,” said Randy Frederick, managing director of active trading and derivatives at the Schwab Center for Financial Research in Austin, Tex.

In government bonds, the benchmark 10-year Treasury note increased 3/32 to 93 22/32, sending the yield down to 2.48 percent, from 2.49 percent late Friday.

Article source: http://www.nytimes.com/2013/07/02/business/daily-stock-market-activity.html?partner=rss&emc=rss