US stocks jump on green shoot hopes
US STOCKS rose yesterday, the start of the third quarter, as reassuring manufacturing data from China, Europe and the United States reinforced hopes that the world’s economy is on the road to recovery.
A day after the benchmark S&P 500 wrapped up its best quarter in a decade, investors ploughed new money into stocks, boosting growth-sensitive sectors like energy, industrials, technology, materials and consumer discretionaries.
But with the release of the all-important June non-farm payrolls data just a day away, some caution prevailed, causing indexes to finish sharply off their highs.
A weaker US dollar underpinned stocks of multinational companies such as Coca-Cola, up 2.5 per cent at $49.18, as investors bet the US currency’s decline might boost overseas earnings. Coca-Cola is one of the best-known defensive stocks, which are shares of companies deemed better able to withstand an uncertain economy. General Mills, the maker of Cheerios cereal, also gave investors more reason to be optimistic about the economy after the food company forecast a stronger-than-expected annual profit, sending its stock up 3.9 per cent to $58.18.
Volume was light because of the absence of most market players in a holiday-shortened week. US financial markets will be closed tomorrow for the US Independence Day holiday.
The Dow Jones industrial average rose 57.06 points, or 0.68 per cent, to 8,504.06. The Standard & Poor’s 500 Index gained 4.01 points, or 0.44 per cent, to 923.33. The Nasdaq Composite Index shot up 10.68 points, or 0.58 per cent, to 1,845.72.
Earlier in the session, indexes had risen more than 1 per cent, but pared gains heading toward the close as apprehension about today’s non-farm payrolls data crept into the market.
The initial estimate, called for payroll losses of 355,000 non-farm jobs last month. But an updated poll this week raised the figure to 363,000 jobs. The department said in May that 345,000 positions were eliminated by employers. The unemployment rate is expected to have crept up to 9.6 per cent—its highest since June 1983 — from 9.4 per cent in May.