U.S. Stocks Rise On Manufacturing Data

U.S. stocks closed higher Monday, but well off session highs reached after a survey of U.S. manufacturers added to positive economic reports from Europe and Japan.

The Dow Jones Industrial Average  finished up 65.36 points, or 0.4%, at 14,974.96, after trading up as much as 174 points during the session. It’s the fifth session out of the past 21 where the Dow has not closed with a triple-digit move.

The S&P 500  advanced 8.68 points, or 0.5%, to close at 1,614.96, coming off an earlier gain of 20 points. Cyclical stocks led the charge with industrials and materials the best performers, while defensive stocks such as telecoms and utilities closed lower.

Both the Dow industrials and S&P 500 have closed higher four out of the past five sessions.

The Nasdaq Composite  had its fifth day of consecutive gains, adding 31.24 points, or 0.9%, to close at 3,434.49, after being up as much as 51 points intraday.

Stocks rallied to their highs earlier in the session after the Institute for Supply Management reported its manufacturing index rose to 50.9% in June from 49% in May, topping forecasts for a recovery to 50.6%. Readings over 50% indicate expansion. The new orders index improved to 51.9%, but the employment index slipped into contraction territory.

“I thought the move up was a bit extreme,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott. “But the market is treating good news as good news again.”

With the abbreviated trading week given Thursday’s Independence Day holiday, volume should be relatively low this week, so some intraday profit-taking would not come as a surprise, Luschini said.

After a rough couple of weeks for stocks that included worries about a liquidity crunch in China and more anxiety about the Federal Reserve tapering easing measures, the market appears to have established a base, said Dan Greenhaus, chief global strategist at BTIG LLC.

Benchmark U.S. indexes ended the second quarter with more than 2% gains, but fell more than 1% in June.

“As concerns about a Chinese liquidity crisis ease, we have improved global manufacturing, putting a bid on stocks,” Greenhaus said.

This week is capped by Friday’s report on nonfarm payrolls for June, the data point that will matter most to stocks given how it affects the Fed’s thinking on easing, according to Greenhaus and Luschini.

Advancing stocks outpaced decliners by 5 to 2 on both the New York Stock Exchange and the Nasdaq. Composite volume topped 3 billion shares on the NYSE and 1.5 billion shares on the Nasdaq by the close.

U.S. stocks futures showed little reaction to the release of a less-widely followed survey, the June U.S. flash manufacturing PMI from Markit. It fell to 51.9 in June from 52.3 in May.

In Europe, a euro-zone purchasing managers’ index showed a rise to a 16-month high in June, according to Markit. PMIs rose in all nations except Germany, which showed a slight revision down from a prior reading. The Stoxx Europe 600  rose 1.2%, adding to gains after the U.S. market opened.

Most Asia markets outside Japan fell after two separate manufacturing surveys showed a further loss of momentum in China. Other surveys showed weakened conditions in South Korea and Taiwan, both affected by the slowdown in China. The Shanghai Composite  ended 0.8% higher after a choppy session, while the Korean and Taiwan benchmarks fell.

But in Japan, stocks finished at their best level in more than a month as the U.S. dollar rose above 99 yen after an upbeat reading on sentiment among Japanese businesses in the quarterly tankan survey. Japan’s Nikkei 225  rose 1.3%.

Gold prices gained alongside oil prices.

Shares of Apple Inc.  rose 3.2% after news the company has filed a trademark application for “iWatch” in Japan, increasing speculation Apple may be gearing up to introduce a new watch-like device.

Separately, Raymond James raised its rating on Apple to strong buy from outperform, citing the stock’s valuation and its belief “that near-term financial trends will stabilize and then improve following the June quarter.”

Shares of BlackBerry  fell 1.6% following several broker downgrades in the wake of disappointing results from the handset maker.

Source : Marketwatch