Rally Time!

NEW YORK (AP) - The stock market began August with a huge rally after economic and earnings reports from around the world revived investors' faith in the global recovery. The Dow Jones industrial average jumped 163 points in afternoon trading. Major stock indexes all rose more than 1 percent.
The market rallied at the opening bell on upbeat economic news from China and earnings reports from European banks. Then, shortly after trading began, investors got a surprisingly good report on U.S. manufacturing. The Institute for Supply Management said its manufacturing index slipped to 55.5 in July from 56.2 a month earlier.

The results showed a modest slowdown in growth, but traders were pleased because the index came in higher than the 54.1 forecast by economists polled by Thomson Reuters. And any reading above 50 indicates expansion.
The market was encouraged by several key components of the index. Production and new orders both improved, as did companies' willingness to hire new employees.
"Every component in ISM was greater than 50," said Cort Gwon, director of trading strategies and research at FBN Securities. "To have all of them up is a good sign."
Stock trading has been erratic for months because of signs the recovery was weakening. Strong earnings in July helped drive stocks to their best month in a year, but the rally was fading at the end of the month on new worries about the economy. The ISM report is significant because it is the first major reading of the economy from July and investors are trying to determine just how strong the recovery will be in the second half of the year.