Wall St rallies as US outlook brightens

Specialist Neil Gallagher, left, and trader Thomas Lee work on the floor of the New York Stock Exchange. Photo / AP
Specialist Neil Gallagher, left, and trader Thomas Lee work on the floor of the New York Stock Exchange. Photo / AP

Wall Street rallied as the latest data on US manufacturing, construction spending and car sales bolstered optimism about the outlook.

An Institute for Supply Management report showed that its index of national factory activity rose to 49.5 last month, up from 48.2 in January and it was the highest reading since September.

Separately, a Commerce Department report showed construction spending increased 1.5 per cent to US$1.14 trillion in January, the highest level since October 2007, from an upwardly revised 0.6 per cent advance in December.

"Forming a base and getting to rebound is the first step in the manufacturing sector healing," Tom Simons, a money-market economist at Jefferies in New York, who correctly forecast the improvement in the factory index, told Bloomberg. "It's certainly encouraging to see manufacturing start to turn it around because that suggests that services can do better at some point as well."

Wall Street moved higher. In 1.04pm New York trading, the Dow Jones Industrial Average rallied 1.7 per cent, while the Nasdaq Composite Index jumped 2.2 per cent.

In 12.49pm trading, the Standard & Poor's 500 Index advanced 1.9 per cent.

Gains in shares of Apple and those of Goldman Sachs, last up 3.4 per cent and 3 per cent respectively, led the Dow higher.

Shares of Ford Motor climbed, last up 4.4 per cent, after the car maker reported better-than-expected sales for February. US sales rose 20 per cent last month, compared with the year-ago month. It was its best February since 2005, Ford said. Shares of General Motors also gained, up 1.5 per cent, even after it posted a surprise drop in monthly sales.

The car sales data bode well for consumer spending.

"Consumers, while still cautious overall, are confident enough in their own personal economic situation and the outlook to be able to purchase a car," Sam Bullard, a Wells Fargo economist, told Reuters.

Shares of United Technologies Corp bucked the trend, last trading 2.5 per cent weaker, after Honeywell International said it scrapped its US$90.7 billion offer to buy the company because of UTC's "unwillingness to engage in negotiations".

In Europe, the Stoxx 600 Index ended the session with a gain of 1.4 per cent from the previous close. All 19 industry groups rose, according to Bloomberg. The UK's FTSE 100 Index rose 0.9 percent, while France's CAC 40 Index increased 1.2 per cent, and Germany's DAX Index gained 2.3 per cent.

"Sentiment is starting to improve," John Plassard, senior equity-sales trader at Mirabaud Securities in Geneva, told Bloomberg. "Everybody was thinking it was the end of the financial world but this was not the case. Crude is up, the auto sector is doing well. And recent economic fundamentals globally haven't been bad."

- BusinessDesk

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