Stocks surge on factory data; commodities, chip stocks lead

The S&P 500 Index gained 1.43 percent, or 15.31 points, to end at 1,089.18. The Dow Jones Industrial Average gained 118.20 points, or 1.17 percent, to reach 10,185.53.

The top 10 gainers of the S&P 500 were either involved in commodities or semiconductors. Cliffs Natural Resources (NYSE:CLF) gained 7.81 percent and Nvidia (NASDAQ:NVDA), a maker of graphics processing units (GPUs), closed up 7.67 percent.

The Semiconductor Industry Association (SIA) said today that global semiconductor sales were $22.4 billion in December 2009, up 29 percent year-on-year. Although sales were down 9 percent in 2009, SIA president George Scalise said the industry weathered the economic recession well and is positioned for growth as the economy recovers.

Manufacturing activities for China, one of the world's biggest sources of demand for raw materials, expanded in January, according to a government issued report and a separate report released by HSBC Holdings Plc and Market Economics.

Similarly, the U.S. reported growth in manufacturing activities this morning. The ISM Manufacturing PMI index was 58.4 for January. According to a survey by Bloomberg, it beat the highest estimate of 58 and the median estimate of 55.5.

The index grew for the sixth consecutive month and showed its highest reading since August 2004. New orders, production, employment, backlog of orders, exports, and imports all rose for the manufacturing sector. Inventories decreased in January, but at a slower pace.

A few monthly reports on U.S. consumers were also released this morning. They were mostly in line with expectations. Personal spending increased 0.2 percent in December. It was less than the 0.7 percent gain in November and below expectations of 0.3 percent, according to Bloomberg.

The reports may have had a negative effect on consumer related stocks. Retail giants such Wal-Mart (NYSE:WMT) remained mostly flat or down.

President Obama announced his $3.83 trillion 2011 budget this morning. The administration estimated the budget deficit would be $1.56 trillion in 2010 and $1.27 trillion in 2011.

The proposal includes a $100 billion jobs package, $192 billion for war spending, and an increase in taxes for families making over $250,000 that is projected to generate $700 billion over the next 10 years.

The Department of Defense will receive $548.9 billion and the Department of Health and Human Services will receive $81.3 billion.

Upon the announcement of Obama's 2011 budget, the dollar began dropping against the yen and the euro. Since 10:00 am in New York, it lost about 13 pips against yen and 36 pips against the euro.

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