Stocks are pushing back to recent highs today, lifted by strong
manufacturing data in China and Europe.
S&P 500 futures are up about two-thirds of a percent amid broad
strength in global markets. Germany and Italy are leading the move
in Europe with gains of more than 1 percent. Japan's Nikkei was the
strongest index in Asia's overnight session, rallying 2.5 percent
as the yen falls. Shanghai rose almost 2 percent and the Hong
Kong's Hang Seng added almost 1 percent.
China's purchasing managers index came in at 50.1 for July, while
economists had expected a 49.9 reading. Markit's gauge of activity
in Europe showed growth for the first time in two years, also
beating forecasts. (Readings above 50 indicate expansion for both.)
The numbers followed lower unemployment numbers for Europe
yesterday and strong economic sentiment on Tuesday.
Other economic headlines have been strong, as well. Yesterday, a
survey of private-sector payrolls showed more growth than expected
in July and second-quarter gross domestic product grew much more
than anticipated. The Federal Reserve also refrained from
mentioning when it might stop asset purchases, allaying fears that
interest rates will rise quickly. Central banks in Europe followed
a similar course this morning.
The data will continue to flow in the United States trading
session: Initial jobless claims will be announced at 8:30 a.m. ET,
followed at 10 a.m. by construction spending and the Institute of
Supply Management's survey of manufacturing activity.
The S&P 500 spent more than three weeks consolidating around
its previous highs from May. If today's gains continue, it could
mark a breakout to new highs and confirm that the secular bull
market remains intact. Strength has occurred broadly across the
market, with no single sector clearly showing leadership.
Another attribute of the bull market is a lack of clear correlation
between stocks, commodities and currencies. Today, for instance,
the euro is down against the U.S. dollar, but oil and copper are
surging by more than 1 percent. The Japanese yen is also down
across the board, which favors risk appetite. Precious metals are
eking out small gains, but agricultural foodstuffs are mostly
Several stocks are moving on company-specific news as earnings
season continues to unfold. Chinese travel agency Ctrip.com
International is indicated up 13 percent after profit and revenue
beat estimates. Movie studio DreamWorks Animation SKG rose 5
percent, also on strong results. E-commerce stock Yelp is up 7
percent and real-estate website Trulia is surging 12 percent.
Retailer J.C. Penney is also up almost 6 percent after denying a
report yesterday that its suppliers had lost financing.
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