U.S. Stocks Rise on Economic Data
14 March 2019 - 3:45AM
Dow Jones News
By Amrith Ramkumar and Avantika Chilkoti
The S&P 500 climbed for the third consecutive session
Wednesday, lifted by fresh signs of stability in the manufacturing
sector and muted inflation.
The benchmark equity gauge added 0.9% and was on track to close
at a four-month high after falling in every session last week. The
Dow Jones Industrial Average climbed 158 points, or 0.6%, to 26712.
The tech-heavy Nasdaq Composite rose 0.9%.
Renewed faith in U.S. economic growth and a patient approach by
the Federal Reserve regarding interest-rate increases have powered
this year's stock rebound, pushing the S&P 500 up 12% for the
year and within 4.5% of its September record.
Despite slowing growth overseas, some analysts expect stable
economic activity and the Fed's cautious stance to keep markets
supported moving forward. Wednesday's market rally was broad, with
every S&P 500 sector climbing, led by the financial, industrial
and technology groups.
"People are comfortable with the market," said Mohit Bajaj,
director of ETF trading solutions at WallachBeth Capital. "The move
this week has given a lot of people confidence."
Data Wednesday showed demand for long-lasting goods produced by
U.S. factories rose in January for the third consecutive month, a
sign of momentum for manufacturers.
And producer prices edged higher last month, the latest sign
that underlying inflation pressures remain tepid and a positive
development for investors hoping contained inflation will prevent
the Fed from raising rates this year.
After worries about a sharp economic slowdown roiled markets
last quarter, analysts have said data early in the year has pointed
to more gradual weakness that won't drastically crimp revenue
growth.
"Things have generally by and large not been as bad as feared,"
said Christopher Mack, a portfolio manager who helps manage the
Harding Loevner Global Equity Fund.
Bond yields stabilized after Wednesday's data, with the yield on
the benchmark 10-year U.S. Treasury note climbing to 2.618%,
according to Tradeweb, from 2.605% a day earlier. Yields rise as
prices fall. They had dropped to a two-month low following Friday's
weaker-than-expected hiring data.
Boeing shares also halted their sharp slide, supporting the Dow
industrials after the largest component in the price-weighted index
tumbled to start the week. Several countries have suspended flights
of the Boeing 737 MAX after the model was involved in a second
deadly crash in less than five months on Sunday. The stock wobbled
between gains and losses and was recently down 0.5% Wednesday.
Shares of the aerospace company are still up 16% for the year
despite their recent slide, part of a resurgence in cyclical stocks
often tied to sentiment toward economic growth.
The recent rally in technology and internet stocks, with the
S&P 500 information technology sector bringing its rise to
nearly 4% this week with Wednesday's climb, has also given
investors more confidence that stocks can keep advancing.
The market's most popular names from Amazon.com to Apple are now
up 13% or more for the year, closing the gap on the rest of the
sector.
"When those stocks perform well, it makes people think the
market is in a strong position," Mr. Bajaj said.
Some analysts remain concerned that slow economic activity
overseas could ripple to the U.S. as trade talks between the U.S.
and China continue. After the European Central Bank slashed its
2019 eurozone growth forecasts last week while unveiling new
stimulus measures, uncertainty about the U.K.'s departure from the
European Union has swung markets in recent days.
British lawmakers rejected a Brexit deal Tuesday, and the U.K.'s
parliament was set to vote Wednesday on whether they want to leave
the EU without a divorce deal. The U.K. also cut its forecasts for
2019 economic growth Wednesday to 1.2% from 1.6%.
"The questions surrounding China, the strength of the economy,
the Chinese trade wars and Brexit all combined is particularly
sensitive for Europe," said David Slater, a portfolio manager at
London hedge fund Trium Capital.
The British pound trimmed some of its recent slide against the
dollar Wednesday, and the U.K.'s FTSE 100 was little changed.
The Stoxx Europe 600 added 0.6%.
Asian stocks were mostly lower, with the Shanghai Composite down
1.1%, Hong Kong's Hang Seng Index dipping 0.4% and Japan's Nikkei
dropping 1%.
Write to Amrith Ramkumar at amrith.ramkumar@wsj.com and Avantika
Chilkoti at Avantika.Chilkoti@wsj.com
(END) Dow Jones Newswires
March 13, 2019 12:30 ET (16:30 GMT)
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