U.S. stocks mostly rose on Monday as growth in manufacturing provided more evidence that the economy may be picking up, or at least not getting any worse.
The gains came after news that U.S. manufacturing grew in September for the first time in four months.
The Institute for Supply Management, a trade group of purchasing managers, also said its gauge of manufacturing employment rose following a decline in August. That's a hopeful sign that the government may report job growth in its monthly survey of the labor market on Friday.
Also Monday, the government said U.S. builders spent more on home construction in August, the latest positive sign for the housing market.
Investors are looking for signs that workers will have more money to spend, said Jerry Webman, chief economist for OppenheimerFunds Inc. That's a "virtuous cycle" that can generate some of its own fuel for a recovery.
"If you're going to manufacture more you're going to employ more people, and if you employ more people you're going to pay them money, and they're going to buy some stuff," helping the economy, Webman said.
But market indexes gave up most of their gains in the afternoon. The decline started after Federal Reserve Chairman Ben Bernanke said the Fed needs to keep interest rates low because the economy isn't growing fast enough to reduce high unemployment. It wasn't clear whether investors were reacting directly to Bernanke's remarks or just taking profits from a morning where stocks showed their strongest gains in days. Monday was only the third day since Sept. 17 that the S&P 500 has risen.
The S&P closed 0.3 percent higher, rising 3.82 points to close at 1,444.49. The Dow Jones industrial average rose 77.98 points to close at 13,515.11. The Nasdaq composite fell 2.70 points to close at 3,113.53.
Monday was the first day of trading of the fourth quarter, and the early gains were a welcome change of pace from the way the last quarter ended. U.S. indices fell on Friday for the fifth day out of the previous six.
Quincy Krosby, market strategist at Prudential Financial, said investors believe that the news about the economy has stopped getting worse. Besides the U.S. manufacturing news on Monday, she noted that recent data from China suggests that manufacturing has improved there as well.
"The numbers were still weak, but they were not as bad as before," Krosby said. "So that was a positive backdrop for the market."
Wendy's Co. fell 28 cents, or 6.1 percent, to $4.25 after a Janney Capital Markets analyst lowered his rating on the stock, saying there are seeing signs that the hamburger chain's revenue won't be as strong as expected.
Markets around Europe rose. An audit of 14 Spanish banks showed the lenders need an extra $77.6 billion in capital. That's roughly what was expected, and well within the amount Madrid can get from fellow European countries.
A slight improvement in a survey of the euro zone's manufacturing sector also helped.
The euro rose to $1.288.
The yield on the 10-year Treasury note fell slightly to 1.62 percent.