Stocks rally on strong global data

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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 lower.

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.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Options

Referenced Stocks: SPX

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