Wednesday 2nd March 2016
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Wall Street rallied as the latest data on US manufacturing, construction spending and car sales bolstered optimism about the outlook.
An Institute for Supply Management report showed that its index of national factory activity rose to 49.5 last month, up from 48.2 in January and it was the highest reading since September.
Separately, a Commerce Department report showed construction spending increased 1.5 percent to US$1.14 trillion in January, the highest level since October 2007, from an upwardly revised 0.6 percent advance in December.
“Forming a base and getting to rebound is the first step in the manufacturing sector healing,” Tom Simons, a money-market economist at Jefferies in New York, who correctly forecast the improvement in the factory index, told Bloomberg. “It’s certainly encouraging to see manufacturing start to turn it around because that suggests that services can do better at some point as well.”
Wall Street moved higher. In 1.04pm New York trading, the Dow Jones Industrial Average rallied 1.7 percent, while the Nasdaq Composite Index jumped 2.2 percent. In 12.49pm trading, the Standard & Poor’s 500 Index advanced 1.9 percent.
Gains in shares of Apple and those of Goldman Sachs, last up 3.4 percent and 3 percent respectively, led the Dow higher.
Shares of Ford Motor climbed, last up 4.4 percent, after the car maker reported better-than-expected sales for February. US sales rose 20 percent last month, compared with the year-ago month. It was its best February since 2005, Ford said. Shares of General Motors also gained, up 1.5 percent, even after it posted a surprise drop in monthly sales.
The car sales data bode well for consumer spending.
“Consumers, while still cautious overall, are confident enough in their own personal economic situation and the outlook to be able to purchase a car,” Sam Bullard, a Wells Fargo economist, told Reuters.
Shares of United Technologies Corp bucked the trend, last trading 2.5 percent weaker, after Honeywell International said it scrapped its US$90.7 billion offer to buy the company because of UTC’s “unwillingness to engage in negotiations”.
In Europe, the Stoxx 600 Index ended the session with a gain of 1.4 percent from the previous close. All 19 industry groups rose, according to Bloomberg. The UK’s FTSE 100 Index rose 0.9 percent, while France’s CAC 40 Index increased 1.2 percent, and Germany’s DAX Index gained 2.3 percent.
“Sentiment is starting to improve,” John Plassard, senior equity-sales trader at Mirabaud Securities in Geneva, told Bloomberg. “Everybody was thinking it was the end of the financial world but this was not the case. Crude is up, the auto sector is doing well. And recent economic fundamentals globally haven’t been bad.”
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