Stocks rise after mixed economic data
NEW YORK — Investors kicked off the stock market’s third quarter with a moderate gain after getting some reassuring data on manufacturing and housing.
The Dow Jones industrial average rose by 0.7 percent Wednesday, rebounding from the previous day’s selloff that was triggered by a drop in consumer confidence. Other indexes made moderate advances as well.
The buying was tempered by caution ahead of today’s June jobs report.
“That’s going to be the big one,” said Chris Johnson, president of Johnson Research Group. “People are keeping their eye on the unemployment figure.”
The Labor Department is expected to report another uptick in the unemployment rate to 9.6 percent, according to economists surveyed by Thomson Reuters. Growing unemployment has been keeping investors nervous about consumer spending — a major driver of growth.
Much of Wednesday’s data was positive, including a report showing more stable manufacturing activity in the United States. The Institute of Supply Management’s manufacturing index posted a 44.8 — up from 42.8 in May and the best showing since last August, a month before the financial crisis erupted with force. Any reading below 50 is viewed as a signal of contraction in manufacturing.
In a hint of better days to come, the National Association of Realtors said an index of pending home sales edged up 0.1 percent in May. It was the fourth straight advance for the index, which tracks contracts to buy previously owned homes.
Not all of the economic news was upbeat, however. Construction spending fell in May for the seventh time in the past eight months. Spending dropped more than expected as strength in nonresidential building was eclipsed by a decline in housing construction and weakness in government projects.
The Dow rose 57.06, or 0.7 percent, to 8,504.06. It climbed as high as 8,580.47 in earlier trading, but then pared its gains as the day went on.
The Standard & Poor’s 500 index rose 4.01, or 0.4 percent, to 923.33. The Nasdaq composite index rose 10.68, or 0.6 percent, to 1,845.72.
About three stocks rose for every one that fell on the New York Stock Exchange, where consolidated volume came to a lower-than-usual 4 billion shares, versus 4.9 billion shares the day before.
Scott Fullman, director of derivatives investment strategy for WJB Capital Group, said the employment report — along with thin, pre-holiday trading volumes — could make for a volatile market today. U. S. markets are closed Friday in observance of the July Fourth holiday.
Nonetheless, investors remain optimistic that the economy will be in better shape by year end. “The belief is the worst is behind us,” Fullman said.
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