World stock markets rallied Wednesday amid signs that the American recovery could be gaining traction -- led partly by factory output -- and relief that Europe might be on the verge of finding some much-needed leadership on its widening financial crisis.
"There is a subtle mood shift," said Bob Atwell, chief executive at Nicolet National Bank in Green Bay. Even as mortgage and banking businesses remain a drag on the U.S. economy, "I sense a shift in psychology that's more tilted to optimism than pessimism."
The Institute for Supply Management, a national industry association, said its widely followed manufacturing activity index posted its 16th straight month of expansion in November.
Another indicator that curled upward Wednesday was the monthly employment survey from ADP Employer Services, which showed that U.S. employers added more jobs than in any other month since November 2007. Data from ADP, which provides payroll and tax services to other companies, sparked a speculative frenzy ahead of Friday's official monthly employment report from the U.S. Labor Department, as some traders bet the nation finally will show a large monthly job gain.
The Dow Jones industrial average posted its biggest gain since Sept. 1, rising 249.76 points, or 2.3%, to 11,255.78. The Standard & Poor's 500 index rose 25.52, or 2.2%, to 1206.07. The Nasdaq composite rose 51.20, or 2.1%, to 2549.43.
As recently as summer, economists speculated about the likelihood of a double-dip recession. A full 12 months into the recovery, American unemployment remains high by any measure. And in many ways, the economy continues to send mixed signals.
But sentiment appears to be shifting, economists said, not least after the government last week revised its estimate of the pace of economic growth to 2.5% in the third quarter from a preliminary 2.0%.
In a busy day of economic releases Wednesday, the Federal Reserve Bank reported that 10 of its 12 regions around the nation are growing. Only those with headquarters in Philadelphia and St. Louis reported that conditions are mixed.
The Institute for Supply Management's manufacturing index should carry special weight in Wisconsin, which employs a greater share of its workforce in manufacturing than any other state. The factory activity index came in at 56.6 for November, little changed from 56.9 in October. Any reading above 50 indicates growth. At the depths of the recession, it was closer to 30; as recently as April, it shot to 60.4.
Awaiting news on jobs
Wall Street's rally set the stage for Friday morning's release of the Labor Department's jobs report for November.
Job-creation gains have been glacial at best during most months so far this year. In October, the ranks of unemployed Americans who gave up even trying to look for a job hit a record of more than 1.2 million, even as the nation managed to add 151,000 net new jobs.
Economists on average expect the nation's employers to at least match October's gains, said Rogier Kamerling, chief economist in Milwaukee at M&I Capital Markets.
But some of the most crucial events for stock investors took place in Europe.
The instability that rocked Greece earlier this year was followed by the second European financial bailout in less than a year in Ireland. One reason that markets fell in the three previous trading days were fresh concerns that the fiscal contagion from Greece and Ireland could spread to Spain, Portugal and Italy, which all share the same currency under Europe's 11-year-old euro project.
"Ireland you can deal with, but Spain and Italy are big," Kamerling said.
Some of the run-up on Wednesday was fueled by hopes that the European Central Bank, which manages the single currency, will use its monthly meeting on Thursday to signal new activism to support the euro bloc economy, Kamerling and others said.
Some now expect the Frankfurt-based European Central Bank to show a willingness to buy bonds issued by euro zone countries, a move that pumps liquidity into the European financial system. The Euro Stoxx 50, which tracks blue chip companies in Europe, rose 2% Wednesday.
In Asia, meanwhile, stocks rose on signals that the Chinese economy is growing. A Chinese state index of manufacturing activity indicated that the country's economy expanded for the 21st straight month.
Rockwell sees strength
Gains in the manufacturing sector in the United States and China have not been lost on Rockwell Automation Inc., which many view as a bellwether of the global manufacturing economy because it outfits factories with systems to enhance their productivity.
The Milwaukee-based company has been telling investors for weeks that it sees strength in the industrial sectors. Asked Wednesday for comment, Rockwell repeated its statement that manufacturers are beginning to make large capital investments in their plants.
"We are generally optimistic that recovery will continue in fiscal 2011," chief executive Keith Nosbusch said last month.
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