* U.S. manufacturing grows more than expected
* Pending home sales surge in September
* Banks slip after Fed official's comments
* Indexes up: Dow 0.8 pct, S&P 0.7 pct, Nasdaq 0.2 pct
* For up-to-the-minute market news, click []
(Adds Black & Decker, Stanley Works merger, Ford stock offer)
By Chuck Mikolajczak
NEW YORK, Nov 2 (Reuters) - U.S. stocks rose on Monday
after another round of solid economic reports but pulled off
session highs after a Federal Reserve official's warning about
banks' loan losses.
The three major indexes had previously risen about 1
percent earlier in the session as stronger-than-expected data
on manufacturing and pending home sales spurred a broad-based
advance and soothed worries over the recovery's strength. For
details, see [].
Industrial and materials stocks rose after the solid
numbers on manufacturing activity, with the S&P Industrials
index <> and the S&P Materials index <.GSPM> both rising 1
percent.
However, the Fed official's critical comments about banks'
potential losses on commercial real estate loans caused
investors to sell some financial shares. Stocks still managed
to close the session with solid gains but could not maintain
earlier momentum.
"The market has turned from buying on dips to selling on
rallies," said Terry Morris, senior vice president and senior
equity manager for National Penn Investors Trust Company in
Reading, Pennsylvania.
The Dow Jones industrial average <> gained 76.71
points, or 0.79 percent, to end at 9,789.44. The Standard &
Poor's 500 Index <.SPX> climbed 6.69 points, or 0.65 percent,
to 1,042.88. The Nasdaq Composite Index <> added 4.09
points, or 0.20 percent, to 2,049.20.
Ford Motor Co <F.N> shares jumped 8.3 percent to $7.58
after the automaker posted a quarterly profit, compared with
Wall Street's estimates for a loss, as it cut costs and gained
market share, prompting it to boost its 2011 outlook to
"solidly profitable" from break-even. []
But shares fell 2.9 percent to $7.36 in extended-hours
trading after the automaker proposed a credit facility
extension and said that it plans to offer $2 billion in
convertible notes and may offer up to $1 billion in stock.
[]
In testimony before a congressional committee on Monday,
Jon Greenlee, the associate director of the Fed's Division of
Banking Supervision and Regulation, said U.S. banks are at risk
for sizable new loan losses, particularly on commercial
property, and some banks may not have enough capital to fully
cushion against setbacks. []
On Tuesday, the Federal Reserve is set to begin its two-day
policy meeting.
The KBW Banks index <.BKX> rose 0.9 percent, well off its
earlier high that had driven it up more than 3 percent.
Citigroup Inc <C.N> shares fell 2.4 percent to $3.99.
After the closing bell, tool maker Stanley Works <SWK.N>
said it will buy rival Black & Decker Corp <BDK.N> in a $3.46
billion stock deal. [] Black & Decker shares
surged nearly 20 percent to $56.57 in extended trade while
Stanley Works added 2.9 percent to $46.45.
The S&P 500 is up more than 52 percent since its 12-year
closing low on March 9. But the S&P has shown signs of slowing
recently and has struggled to maintain rallies, posting
declines in the past two weeks.
The Nasdaq eked out a slim gain, weighed down by a 5.1
percent drop in the stock of BlackBerry maker Research In
Motion <RIM.TO><RIMM.O>. The stock finished at $55.74, down
$2.99. It limited the Nasdaq's gains after an analyst told
investors to sell the stock because of increasing competition
from other smart phone makers. []
(Reporting by Chuck Mikolajczak; Editing by Kenneth Barry)
