US stocks extend gains on good data
US stocks extended January’s rally yesterday after upbeat global manufacturing data boosted sentiment and as Greece neared a long-delayed deal with private creditors.
The recent run of better-than-expected economic data around the world, though still not suggesting a booming expansion, has helped lift equity markets as investors move away from a worst-case scenario for the global economy.
An index of the US manufacturing sector rose in January to its highest level since June, an industry group said, while China’s factory sector expanded slightly, confounding expectations for a contraction. Germany recorded its first rise in manufacturing output in four months.
Optimism spurred gains in industrials, financials and basic materials, which rose between 1.1 per cent and 1.7 per cent. Caterpillar, a company heavily exposed to global industry, rose 1.3 per cent to $110.52 and was the biggest boost to the Dow industrials.
Trading volume was higher than it has been in recent days. Volume of the NYSE, Amex, and Nasdaq was 7.8bn compared to its 20-day moving average of 6.97bn. The wider participation comes after four down days when market movements were minimal and volume generally light.
Stocks also got a boost after Greek finance minister Evangelos Venizelos said talks between Athens and its private creditors were “one formal step away” from a deal needed to avoid a messy default. Such a deal would be a significant step in removing one of the biggest worries for investors.
US and European banks rallied on the news. Bank of America gained 3.2 per cent to $7.36 and Citigroup rose 2.9 per cent to $31.60.
The Dow Jones industrial average gained 83.55 points, or 0.66 per cent, to 12,716.46.
The Standard & Poor’s 500 Index rose 11.67 points, or 0.89 per cent, to 1,324.08.
The Nasdaq Composite Index climbed 34.43 points, or 1.22 per cent, to 2,848.27.
Amazon slid 7.7 per cent to $179.46 a day after the online retailer warned of a possible first-quarter loss and posted a steep drop in fourth-quarter profit.
According to Thomson Reuters data, with 228 companies having reported results, 61 per cent have beaten expectations – below the 70 per cent beat rate of recent quarters.