NEW YORK – Wall Street extended the rally on Friday, led by gains in resource stocks after data in China showed a pick-up in manufacturing activity.
Gains were tempered by US data suggesting the rate of growth in US factory activity slowed, but the upbeat trend in the market prevailed.
Friday's gains occurred on less-than-stellar volume, but two shares rose for every one that fell on the New York Stock Exchange. Energy and resource shares were helped by data out of China showing a pick-up in its manufacturing sector.
As copper hit a two-year high, gold jumped to another record and oil climbed above $80 a barrel, shares of Freeport-McMoRan Copper & Gold Inc (FCX.N) rose 4.4 percent to $89.13 and Occidental Petroleum Corp (OXY.N) gained 3.2 percent to $80.77.
"The market is going to be very news dependent going in from now, especially after such a strong month. We have had some good news today, especially from China, that prompted a rally in Europe and was carried through the US," said Stephen Massocca, managing director at Webush Morgan in San Francisco.
The Dow Jones industrial average (.DJI) rose 41.63 points, or 0.39 percent, to end at 10,829.68. The Standard & Poor's 500 Index (.SPX) advanced 5.04 points, or 0.44 percent, to 1,146.24. The Nasdaq Composite Index (.IXIC) edged up 2.13 points, or 0.09 percent, to close at 2,370.75.
But for the week, the Dow fell 0.3 percent, the S&P 500 slipped 0.2 percent and the Nasdaq dropped 0.4 percent.
The S&P 500 also hit a key resistance level after it climbed as high as 1,150.30 before losing ground. That level is viewed as the top of a recent range after stocks surged during September.
The third quarter was the best in a year as investor concern about a double-dip recession faded on improved data and on expectations the Fed will inject more money into the economy. The S&P 500 gained 10.7 percent in the July-to-September period.
On a more cautious note, options traders also appeared to be pricing in higher volatility for the near-term. The CBOE Volatility Index (.VIX) or VIX, Wall Street's so-called fear gauge, fell 5.1 percent to 22.50. But both the VIX and the CBOE Nasdaq Volatility Index (.VXN) had closed higher for four sessions out of five.
"Concerns about upcoming economic reports and the release of third-quarter earnings appear to have traders worried," said Scott Fullman, director of derivative investment strategy at WJB Capital Group.
"New healthcare regulations go into effect and the upcoming mid-term elections increase the probability for higher volatility."
Technology shares ranked among the laggards as investors locked in some profits the day after indexes wrapped up the best quarter in a year. Amazon.com (AMZN.O) was among the biggest drags on the Nasdaq, down 2.1 percent at $153.71.
In corporate news, shares of Hewlett-Packard (HPQ.N) fell 3.1 percent to $40.77 after the company named former SAP (SAPG.DE) Chief Executive Leo Apotheker as its new CEO and president.
Bank of America-Merrill Lynch on Friday downgraded Caterpillar Inc (CAT.N), a maker of heavy equipment, to "neutral" from "buy," saying that after a recent run-up in the shares, it saw limited upside. The Dow component was off 0.6 percent at $78.22.
Market regulators issued a report saying a massive sale of futures contracts by Waddell & Reed exacerbated the market's plunge on May 6, in what has become known as the "flash crash.
A total of 7.73 billion shares traded on the New York Stock Exchange, the Amex and the Nasdaq, compared with the previous year's daily average of 9.65 billion shares.
Advancing stocks outnumbered declining ones on the NYSE by about 2 to 1. On the Nasdaq, about 15 stocks rose for every 11 that fell.