DJI- NEW YORK, Oct 1 (Reuters) - Wall Street started a new quarter with a modest rally on Monday, lifted by a surprising expansion in U.S. manufacturing in September.
After rising more than 1 percent by midday, the major U.S. stock indexes came off their highs, with the Nasdaq the hardest-hit. Market participants said Wall Street has shown signs of fatigue as stocks closed a strong third quarter on Friday.
"We are at a level where the market is due for a correction. Also, as we head for a new earnings season here, we should expect more volatility ahead," said Tim Ghriskey, chief investment officer of Solaris Asset management in Bedford Hills, New York.
Among stocks weighing on the Nasdaq, Apple AAPL.O, the world's most valuable publicly traded company, lost 1.2 percent to $659.39, dragging the tech-heavy index lower.
Besides tech, sectors associated with growth were strong. Financial stocks rose, with Goldman Sachs Group GS.N up 2.8 percent at $116.86 after the weekly Barron's said Goldman's stock could rise at least 25 percent in the next year as capital markets improve. An S&P index of financial stocks .GSPF advanced 0.5 percent.
A number of blue-chip stocks hit 52-week highs, helping the Dow outperform the broader market. Shares of General Electric GE.N rose 0.4 percent to $22.81, after rising as high as $22.99 earlier. IBM IBM.N also hit a new 52-week high at $211.75 and The Travelers Co TRV.N rose as high as $69.48 earlier in the session. IBM shares closed up 1.5 percent at $210.47. The Travelers shares gained 1.2 percent to $69.07.
The Dow Jones industrial average .DJI rose 77.98 points, or 0.58 percent, to 13,515.11 at the close. The Standard & Poor's 500 Index .SPX advanced 3.82 points, or 0.27 percent, at 1,444.49. The Nasdaq Composite Index .IXIC dipped 2.70 points, or 0.09 percent, to close at 3,113.53.
After a strong morning session, stocks trimmed earlier gains and the Nasdaq briefly turned negative as Fed Chairman Ben Bernanke defended the U.S. central bank and its ultra-loose monetary policy as it aims to reduce unemployment.
Stimulative measures from the Federal Reserve and the European Central Bank helped the S&P 500 finish the quarter up 5.8 percent, its best third quarter since 2010.
While his speech was more of a reiteration of the Fed's stance, some market participants said the market is getting anxious about the Fed's eventual exit plan.
"He (Bernanke) differentiates money printing and what he claims they are doing by saying money printing is a permanent source of financing for government spending, where he said what the Fed is doing is temporary," said Peter Boockvar, equity strategist at Miller Tabak & Co in New York.
"Unwinding their balance sheet and normalizing the fed funds rate will be highly disruptive," he said.
On the economic front, U.S. manufacturing expanded in September for the first time since May as new orders and employment picked up, an Institute for Supply Management report showed. The ISM data eased concerns about the economy and offset a gloomier outlook in Asia and Europe.
The U.S. data followed surveys in the euro zone that showed manufacturing slackened in the three months to September while Asia's factories are continuing to struggle in the face of tepid demand from the United States and Europe.
About 6.3 billion shares changed hands on the New York Stock Exchange, Amex and Nasdaq, compared with the average daily volume of 6.38 billion.
Advancers outnumbered decliners on the New York Stock Exchange by a ratio of about 3 to 2. And although the Nasdaq ended slightly lower, the breadth was definitely positive with about seven stocks rising for every five that fell.
NYMEX-NEW YORK, Oct 1 (Reuters) - U.S. crude futures rose slightly on Monday, supported by data showing U.S. manufacturing expanded in September, shaking off three months of weakness as new orders and employment picked up.
Front-month November crude CLc1 rose 29 cents to settle at $92.48 a barrel.
CBOT SOYBEAN- Chicago Board of Trade soybean futures fell 2.5 percent as the advancing harvest of U.S. soybeans and planting of the crop in South America promised to raise supplies, traders said.
* Analysts expecting weekly U.S. Agriculture Department report on Monday afternoon to show that U.S. soybean harvest was a record 38 percent complete as of Sept. 30.
• USDA said weekly export inspections of soybeans were 41.699 million bushels, well above forecasts for 13 million to 16 million.
• Goldman Sachs said on Monday it expected corn and wheat prices to outperform soybeans during the next few months due to bigger-than-expected U.S. soybean supplies.
REGIONAL EQUITY- BANGKOK, Oct 1 (Reuters) - Southeast Asian stock markets ended mostly lower on Monday, tracking weak global equities and after a lacklustre session amid market holidays in Asia, but foreign buying pushed Malaysian shares to their highest in almost two weeks.
Malaysia's key stock index .KLSE gained 0.4 percent at 1,643.31, its highest close since Sept. 19. Foreign investors bought $15.14 million worth of shares while domestic institutions and retail investors were net sellers, the Malaysian bourse said.
The Thai SET index .SETI ended 0.07 percent higher after a choppy session. It climbed earlier to a fresh 16-year intraday high of 1,303.68. Banking stocks gained due to optimism about third-quarter earnings, with Kasikornbank KBAN.BK rising 1.1 percent.
Weak buying interest was seen in most markets as China, Hong Kong and South Korea were closed for holidays.
