A report that United States factories rebounded in June prolonged a weeklong rally in the stock market Friday. The Dow Jones industrial average is on track to have its best week in a year.
The Institute for Supply Management’s manufacturing index rose to 55.3 points in June from 53.5 the previous month. The June increase, the first upturn in four months, surprised economists who had been expecting, on average, a further decline to 52, according to a survey by FactSet.
On an otherwise quiet Friday before a long Fourth of July holiday weekend, the report was just enough to spur a flurry of buying.
The Dow Jones industrial average was up 127.14 points, or 1 percent, to 12,541.48. The Standard Poor’s 500-stock index rose 10.97 points, or 0.8 percent, to 1,331.61 points, while the Nasdaq was up 23.05, or 0.8 percent, to 2,796.57.
In Europe, markets also reacted to the manufacturing report. In afternoon trading the FTSE 100 index of leading British shares rose 0.8 percent to 5,991.02, and Germany’s DAX was up 0.8 percent, to 7,432 points. The CAC 40 in France gained 0.8 percent, to 4,015.48 points.
Stock indexes are on pace for their best week since July of last year. The Dow Jones industrial average gained nearly 480 points over the last four days.
Stocks have posted sizeable gains this week as investors first anticipated and then cheered the passage of austerity measures in the Greek Parliament. The planned measures to cut spending and raise taxes by 28 billion euros ($40 billion) over the coming five years were required for the European Union and the International Monetary Fund to release the next 12 billion euro installment of bailout loans that are keeping Greece afloat.
Euro zone finance ministers are expected to authorize their share of the next installment on Saturday night with the IMF following suit some time next week — the finance ministers were initially planning to meet up in Brussels on Sunday but in a surprise development have opted to discuss the disbursement by video conference a day earlier.
The funds will see Greece through September, but the country is going to need another rescue in order to service its mountain of debt. A deal on another bailout is in the works, too, though an agreement is not expected imminently.
The euro has also been a big gainer as Greece bought more time, although on Friday was trading down 0.1 percent at $1.4478.
Earlier in the day, markets had weighed data showing that China’s manufacturing sector grew at its slowest pace in more than two years in June, further evidence that the world’s second largest economy is coming off the boil. Further downbeat news emerged in an equivalent survey in Britain.
Earlier in Asia, Japan’s Nikkei 225 index rose 0.5 percent to close at 9,868, while South Korea’s Kospi index climbing 1.2 percent to 2,126. Markets in Hong Kong were closed for a public holiday.
Mainland Chinese shares were cool to the June manufacturing report, though some investors were apparently relieved to see the economy slowing since that will alleviate concerns over new monetary tightening measures to combat inflation that has dampened market sentiment for months.
The benchmark Shanghai Composite Index saw profit-taking erase earlier gains, edging 0.1 percent lower to 2,759.36, while the Shenzhen Composite Index added 0.5 percent to 1,162.07.
In the oil markets, prices were down with news that growth remains sluggish throughout the global economy. The main New York contract for crude was down $1.46 to $93.96 a barrel.
Article source: http://www.nytimes.com/2011/07/02/business/02markets.html?partner=rss&emc=rss
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