Stocks gain on strong economic data
David Russell | [email protected]
S&P 500 futures rose almost 1 percent, while European indexes are down slightly following gains of 1.5 percent to 2 percent yesterday. Asian markets also remained strong in the overnight session, with Tokyo surging 3 percent and Shanghai up more than 1 percent.
Markets were closed in the United States yesterday in observance of Labor Day, but China and Europe both released purchasing managers indexes that showed better-than-expected manufacturing activity. Attention now turns to the Institute of Supply Management's key factory report at 10 a.m. ET, which significantly outpaced forecasts last month.
Sentiment took a hit last week after the U.S. claimed that Syria used chemical weapons against rebels, but the Obama Administration backed down after the British Parliament voted against war. The question will now be put before Congress and will probably linger for several days.
More data will flow during that time. Today also brings construction spending, followed by the Federal Reserve's Beige Book report of economic conditions tomorrow. Thursday is the busiest session, with German manufacturers orders, the European Central Bank's interest rate decision, retailer same-store sales and ADP's private-sector payroll report. It concludes with the key non-farm payrolls report on Friday morning. Most of those releases beat expectations last month.
The S&P 500 fell in August for only the second time in the last nine months and is now attempting to bounce at its 100-day moving average. The index has steadily trended higher since the beginning of 2013 as an improving economy attracts money that spent half a decade locked up in safe-haven bond funds.
Materials and technology have outperformed in the last month despite weakness in the broader market. The mix of price action also looks bullish this morning, with futures on the small-cap Russell index outpacing the S&P 500 before the opening bell.
Copper and silver are the big movers in the commodity market, gaining 1.5 percent and 3 percent respectively, after the strong economic reports. Oil is mixed, with West Texas Intermediate down half a percent but Brent crude up half a percent. That's potentially bullish for oil refiners. Agricultural products are up across the board.
Foreign-exchange markets are showing a similar bias toward global growth, with the Australian and Canadian dollar both climbing against the greenback. The Japanese yen is also showing signs of breaking out of a four-month consolidation period, which is potentially bullish. The euro is down slightly.
In company-specific news, Verizon Communications and Vodafone are both down slightly after the U.S. company officially agreed to buy VOD's minority stake in Verizon Wireless for $130 billion. Both had rallied last week on preliminary reports of the deal. Nokia is also soaring 44 percent after selling its mobile-phone operations to Microsoft for $7.2 billion.