Dow Rebounds After Manufacturing Reports
Stocks erased their losses Tuesday after a pair of encouraging U.S. manufacturing reports.
The Dow Jones Industrial Average rose after being down more than 80 points this morning. This came after the Dow logged its biggest May point drop in history and its worst percentage decline since 1940.
The Nasdaq was also higher, while the S&P 500struggled to stay in positive territory.
The ISM reported its manufacturing index dropped to 59.7 in May from 60.4 in April but remained in growth mode for a 10th straight month and beat expectations. Plus, a gauge of employment rose.
A separate report showed construction spending rose 2.7 percent in April and the prior month was revised upward to a 0.4-percent increase from 0.2 percent.
Some good news on the jobs front: A quarter of employers said they plan to pay higher salaries to new hires, up from 10 percent six months ago, according to a survey by Dice Holdings.
Still, Gary Kaminsky, a trader and CNBC contributor said this isn't the all-clear sign for investing in stocks.
"[M]y call to action today: Stay small. Don't be afraid of cash."
Kaminsky says there are four outstanding issues before the market can move higher, including the Goldman Sachs case and the impact of the European debt crisis on earnings.
Earlier, stocks had been lower after reports showed a slowdown in manufacturing activity in Europe and Asia.
The euro extended its longest monthly decline versus the dollar in 10 years. The dollar rose 0.67 percent against a basket of foreign currencies.
The euro "is having a rough month, it's having a rough year… it's probably going to continue to have rough times ahead," said Dennis Gartman, author of "The Gartman Letter." "Are we going under $1.20? Almost certainly," he added.
In the credit market, the three-month Libor actually slipped a bit, but the Ted Spread , or the difference between the Libor rate and three-month Treasury bills, grew 4 percent.
Canada raised its key interest rate by a quarter percentage point to 0.50 percent, making it the first G7 nation to raise rates.
US-traded shares of BP skidded as the company announced that its “top kill” attempt to curtail the worst oil spill in U.S. history hasn’t succeeded.
Hewlett-Packard shares fell as the company said it was going to spend $1 billion on a relaunch of its enterprise serviceswhile cutting 6,000 employees.
Apple rose after the company said it has sold 2 million of its iPad tablet computers since the U.S. launch nearly two months ago and the unveiling in nine international markets this past weekend.
Google said it's phasing out use of Microsoft's Windows operating system at its offices due to security concerns after its Chinese operations were hacked. Google employs more than 10,000 workers.
In M&A news, Prudential and AIG shares rose after AIG rejected a request to cut the price of Prudential's $35.5 billion offer for AIA Group, fueling speculation the takeover is off and AIG will press on with its IPO, expected by October.
And shares of ev3 jumped following news that Covidien has agreed to the buy the vascular-treatment company for $2.6 billion.
Still to Come:
WEDNESDAY: Weekly mortgage apps; Buffett speaks at FCIC hearing; pending-home sales; May auto sales; earnings from Hovnanian
THURSDAY: May chain-store sales; Blagojevich trial begins; Fed's Lockhart, Hoenig speak; ADP employment report; weekly jobless claims; productivity; factory orders, ISM services index
FRIDAY: May jobs report; Fed's Lockhart speaks; Walmart shareholder meeting; Sprint's first 4G phone goes on sale
— Reuters contributed to this article.