Manufacturing news lifts stocks

NEW YORK — The fastest growth in U.S. manufacturing in 10 months gave stocks a lift Tuesday and pushed the Dow Jones industrial average to its highest close in more than four years.

The manufacturing news jolted stock indexes out of a morning stupor, although the gains waned throughout the afternoon. “It definitely changed the direction of markets,” said Jack Ablin, chief investment officer at Harris Private Bank.

The Dow added 65.69 points to 13,279.32, its highest closing mark since Dec. 28, 2007, during the first month of the Great Recession.

The S&P finished April in the red, its first losing month since November. The Dow managed a tiny gain.

Treasury prices fell Tuesday, and benchmark crude oil rose $1.29 to settle at $106.16 per barrel. Both of those things tend to happen when investors expect stronger economic growth.

Ablin saw an irony in the reaction to the ISM report. Europe’s debt crisis has knocked markets around for months on worries its troubles could cross the Atlantic. But Europe’s woes have made U.S. manufacturers look more attractive to companies, Ablin said.

“It’s gotten to a point over the last 10 years where it’s better to manufacture here than in pretty much any other developed country in the world,” he said.

In a separate report Tuesday, the Commerce Department said construction spending ticked up in March, following two months of declines.

All 10 industry groups within the S&P 500 climbed, led by energy companies.

Judging by its track record, May isn’t a promising month for stocks. Since World War II, the S&P 500 has gained an average of 0.31 percent in May. For all months, the average gain is 0.67 percent.

In other news:

CHESAPEAKE ENERGY: It jumped 6 percent on reports that the company will strip CEO Aubrey McClendon of his chairman’s title. McClendon, Chesapeake’s founder, was under fire for taking out more than $1 billion in loans using the company’s wells as collateral. Chesapeake recently agreed to end the program.

COLLECTIVE BRANDS: The owner of the shoe store chains Payless and Stride Rite is being acquired for about $1.32 billion by a group that includes the owner of Hush Puppies.

PF CHANG’S: It is going private in a deal with a private equity firm that is valued at around $1.09 billion.

SEARS HOLDINGS: It soared 15 percent, the biggest gain in the S&P 500. The operator of Kmart and Sears stores expects to post a first-quarter profit thanks to a gain from the sale of some U.S. and Canadian stores. The company’s stock has jumped 99 percent so far this year.

ADM: Archer Daniels Midland Co. gained 7 percent after the food conglomerate reported profits that beat analysts’ expectations. Profits dropped by nearly a third over the past year, pulled down by one-time charges and lower weaker results from its ethanol and oilseeds businesses.

AVON: It fell 8 percent, the largest drop in the S&P. The company said earnings plunged 82 percent, hurt by a bigger restructuring charge, commodity costs and rising labor costs. The results were worse than analysts had expected.

PFIZER: First-quarter profit fell 19 percent, due to legal and other charges and new generic competition to blockbuster cholesterol pill Lipitor cutting total U.S. sales by 15 percent. Also, Pfizer has settled a lawsuit filed by Brigham Young University over development of the blockbuster painkiller Celebrex for $450 million.

BP: First-quarter net profit fell 18 percent as its downstream business, which sells fuels, lubricants and fertilizer, struggled.

CATERPILLAR: Union workers walked off the job as a strike hit Caterpillar’s plant in Joliet, Ill.

CBS: Its net income grew 80 percent in the first quarter, as revenue surged on digital licensing deals for its TV shows and overseas sales of reruns.