Economic data from China, Japan, the eurozone, and U.S boosts stocks
US stocks kicked off July on a strong note with small caps pacing the rally. Equities displayed early strength after economic data reported overnight and in the early morning indicated expanding manufacturing activity in China, Japan, the eurozone, and the U.S. Although some of the PMI readings missed estimates, they were all above 50, a level that represents the border between expansion and contraction. The data fostered the bullish tone, which was amplified by the arrival of new money at the start of the quarter.
The Dow Jones Industrial Average came within two points of 17,000 during the session. It gained 129.47 points, or 0.8%, to close at 16,956.04. The Nasdaq Composite rose 50.47 points, or 1.1%, to 4,458.65. The S&P 500 gained 13.09 points, or 0.7%, to end at 1,973.32.
Consumer discretionary, health care, financials and technology lead the rally.
Important economic data from China on Tuesday was upbeat and in line with market expectations. The China purchasing managers index (PMI) came in at 51.0 in June from 50.8 in May. The HSBC June PMI came in at 50.7 from 49.4 in May. A number above 50.0 suggests expansion.
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Meantime, the European Union's manufacturing PMI came in at 51.8 in June versus 52.2 in May. The reading was expected by traders and investors to come in at 51.9 in June.
It's a holiday-shortened trading week in the U.S., what with the Independence Day holiday on Friday. The key U.S. jobs report is issued a day early this month, on Thursday. This report is arguably the most important U.S. economic data of the month. Also on Thursday will be the monthly monetary policy meeting of the European Central Bank. It will be an extra important trading day on Thursday.
Economic data at Wall Street on Tuesday was limited to May Construction Spending and June ISM. Construction spending increased 0.1% in May following an upwardly revised 0.8% (from 0.2%) gain in April. The consensus expected construction spending to increase 0.4%. Private construction spending fell 0.3% in May, giving back nearly all of the 0.3% increase from April. Total public construction spending increased 1.0% in May after increasing 2.1%. The ISM Manufacturing Index fell slightly to 55.3 in June from 55.4, while the consensus expected the Index to increase to 55.8.
Top-weighted tech components like Apple, Google and Qualcomm rallied across the board, while chipmakers fared even better.
In a further sign that consumers are spending more, U.S. car sales in June reached the highest annual rate in more than eight years and exceeded the pace than economists had expected. General Motors shares rose 3% as the car maker reported its U.S. car and light truck sales rose 1% in June to 267,461 vehicles.
Also, shares of Netflix leapt 7% after Goldman Sachs analysts upgraded the stock to a buy, from neutral.
Bullion metals ended moderately higher on Tuesday, 01 July 2014 at Comex. Gold futures on Tuesday logged their highest settlement in about 11 weeks, as clashes in eastern Ukraine and the Middle East boosted safe-haven demand for the precious metal.
Gold for August delivery rose $4.60, or 0.4%, to settle at $1,326.60 an ounce on the Comex division of the New York Mercantile Exchange. On Monday, the yellow metal edged up on the day and ended with a 6.1% gain for June. September silver rose 6 cents, or 0.3%, to $21.12 an ounce.
Crude prices ended mildly lower at Nymex on Tuesday, 01 Juky 2014. Upbeat Chinese and European economic data briefly lifted oil futures above $106 a barrel on Tuesday, but prices settled slightly lower for a fourth session in a row ahead of weekly updates on U.S. supplies.
On the New York Mercantile Exchange, August oil fell 3 cents to settle at $105.34 a barrel. Prices, which fell over the past three trading sessions, had touched a high of $106.09, but also slipped below $105 during the trading session.
Participation remained on the light side with less than 675 million shares changing hands at the NYSE.
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET, while Challenger Job Cuts for June will be announced at 7:30 ET. ADP Employment Change (consensus 200K) for June will be announced at 8:15 ET, while May Factory Orders (consensus -0.4%) will cross the wires at 10:00 ET.
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