NEW YORK (TheStreet) -- Stocks were surging more than 1% higher Tuesday as better-than-expected global manufacturing data and expectations for Federal Reserve Chairman Ben Bernanke's Friday speech made investors more willing to take on risk.
The Dow Jones Industrial Average was up by 127 points, or 1.2%, at 10,981. The S&P 500 was higher by 12 points, or 1%, at 1136, and the Nasdaq was ahead by 34 points, or 1.5%, at 2380.
A purchasing managers index showed that manufacturing activity in China rose to 49.8 in August, compared with July's level of 49.3, beating market expectations.
Meanwhile, manufacturing activity in Germany was also better-than-expected, rising to 52 in August, compared with estimates for a reading of 50.8. A purchasing managers index for the eurozone, however, suggested stagnated growth, remaining unchanged at a reading of 51.1 in August.
Global markets were also strengthening ahead of Federal Reserve Chairman Ben Bernanke's speech at the Kansas City Fed conference in Jackson Hole, Wyo., on Friday. Although most market watchers don't expect Bernanke to signal another quantitative easing program as he did at the conference last year, many believe he may discuss other possibilities during the speech.
"Policymakers are undoubtedly paying close attention to any evidence of an economic stall as they gauge both the necessity and urgency of additional policy accommodation. However, a potential sticking point is the fact that the inflation environment is much less benign compared to conditions at the start of QE2," said Deutsche Bank economists Joseph LaVorgna and Carl Riccadonna in a recent note.
"While energy inflation dominated the CPI earlier this year, the sources have become much more diffuse in recent months," LaVorgna and Riccadonna added. "This creates a conundrum for policymakers, because additional monetary accommodation would likely exacerbate the inflation uptrend. In Chairman Bernanke's semi-annual congressional testimony of mid-July, he stated that additional policy support would only be warranted if economic weakness persisted and deflationary risks reemerged. It is hard to make the case that the latter is occurring in the present environment."
The FTSE in London was adding 0.5% and the DAX in Frankfurt was rising 0.9%. Hong Kong's Hang Seng jumped 2% and Japan's Nikkei advanced 1.2%.
Technology and energy stocks were showing the session's strongest gains with Cisco Systems(CSCO), Exxon Mobil(XOM), Microsoft(MSFT) and Chevron(CVX) trading near the top of the Dow.
Of the 1.3 billion shares trading on the New York Stock Exchange, 74% were rising while 24% were falling. There were 514 million stocks changing hands on the Nasdaq.
The mildest gains were seen across the transportation sector.
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