By Steve Rothwell
NEW YORK (AP) — Investors have stopped worrying about the Federal Reserve. At least for now.
Stocks rose on Wall Street Monday as investors judged that the economy still isn’t growing fast enough for the central bank to cut back on its stimulus program.
U.S. manufacturing grew modestly in June after a pickup in new orders and stronger production, according to a private survey. The Institute for Supply Management said its factory index increased to 50.9 in June from 49 in the previous month.
The Standard & Poor’s 500 index logged its first monthly decline since October last month after investors were unsettled by comments from Federal Reserve Chairman Ben Bernanke. Bernanke said June 19 that the Fed could ease back on its stimulus this year and end it next year, providing the economy continues to recover.
“The market has maybe stepped back from the knee-jerk reaction that the Fed news provided,” said Jim Russell, a regional investment director at US Bank. “The manufacturing ISM number came in strong enough — not too hot, not too cold.”
The central bank is currently buying $85 billion of bonds a month to keep interest rates low and encourage borrowing and spending. That stimulus has been a major factor supporting a rally in stocks this year. Despite last month’s loss, the S&P 500 is still up 13.7 percent this year.
The Dow Jones gained 104 points, or 0.7 percent, to 15,013 as of 2:15 p.m. Eastern Daylight Time. The Standard & Poor’s 500 index rose 12 points, or 0.78 percent, to 1,618. The Nasdaq composite gained 35 points, or 1 percent, to 3,438.
Stocks may have also gotten a lift as it was the first trading day of the quarter.