March 1, 2021

Stocks Rise on Economic Signals

Stocks rose on Tuesday with indexes around the world advancing more than 1 percent, partly helped by stronger economic data in Asia and Europe. It was the second consecutive day of gains for many stocks after weeks of turmoil that were fueled by concerns about a curb in global economic growth and the widening impact of sovereign debt problems.

In early afternoon trading on Wall Street, the Standard Poor’s 500-stock index gained 23.19 points, or more than 2 percent, and the Dow Jones industrial average added 201.70 points, or 1.8 percent. The Nasdaq composite index added 62.05 points, or 2.63 percent.

The 10-year benchmark Treasury bond yield was mostly unchanged at 2.105 percent.

Stock markets in Europe and the Asia-Pacific region also mainly rose as investors interpreted a wide variety of economic statistics and awaited the Federal Reserve’s annual symposium later this week in Jackson Hole, Wyo.

“The market has got in its head that any help from policy makers is desperately needed,” said Robert Buckland, global equity strategist at Citigroup in London. “People are clearly looking at Jackson Hole.” It was at that gathering last year that the Fed chairman, Ben S. Bernanke, signaled further stimulus in light of a similar slowdown of the American economy.

Major European stock markets were up about 1 percent, after a survey of purchasing managers’ expectations for output in the euro area showed no change, at a nearly two-year low.

“The market was factoring in worst-case scenarios for the economic slowdown,” said Russell Price, senior economist with Ameriprise Financial. “Things have slowed down but are not falling off a cliff.”

In addition, a survey of manufacturers in China showed factory activity had probably contracted slightly in August. The findings underpin the widely held perception that the giant Chinese economy is growing at a more moderate, yet still robust, pace than many other places.

Mr. Price noted that the China purchasing managers index was also better than expected, and that current retail data in the United States might be offsetting some of the weaker data from other sectors of the economy.

“We are not continuing to decline to another double-dip,” he said, but “just enough to offset the worst-case scenario.”

But expectations grew that the fighting in Libya could last longer than expected, setting back hope for a recovery of oil output there. The price of oil rose 15 cents, to $84.57 a barrel.

The energy index on the S.P. was up more than 2.6 percent, propelled by shares in Exxon Mobil and Chevron, which rose 3 percent or more.

Materials shares, technology and consumer shares were up more than 2 percent. The financial sector was also up more than 2 percent despite the fact that the most widely traded share on the index, Bank of America, fell about 2.5 percent.

Economic data in the United States continued to document weakness in the housing sector. Sales of new homes fell for the fourth straight month in July, according to the Census Bureau. Although the report showed a bigger-than-forecast drop, the housing market was already weak, so it appeared to have little impact on the broader market.

“This year is shaping up to be the worst year on record for new home sales,” said Patrick Newport, United States economist for IHS Global Insight, in a research commentary.

“We do not see a reason for sales to pick up this year.  The economy is weak, uncertainty is up as is the likelihood of a recession, and foreclosures and delinquencies remain high,” he added.

Many analysts say that investors are waiting for clear statements from policymakers about what they are going to do about fiscal troubles in the euro zone and the economic headwinds in the United States.

The main focus of investor attention this week is the assessment of the American economy by Mr. Bernanke expected during the Fed’s symposium on Friday. Some Wall Street analysts said they expected the Fed to take some action — perhaps lengthening in maturity of the bonds it holds — to depress longer-term interest rates.

“The behavior of financial markets has become truly worrying, with stock market averages down sharply around the globe as heightened risk aversion has gripped markets,” Kevin Logan, chief United States economist at HSBC, wrote in a research note.

“A flight to safety, or alternatively, a disinclination to take risk can affect real economic activity as well as financial markets,” he cautioned. “A recession begins when thousands of independent decision makers all around the country decide to postpone hiring and capital investments, all in an attempt to protect cash positions and reduce risk of loss.”

Stock markets in South Korea and Taiwan saw gains of more than 3 percent by the close of trading, while the main market index in Australia rose 2.2 percent. In Japan, where investors, companies and policy makers remain on edge about the strength of the yen, the Nikkei 225 index closed 1.2 percent higher. The Hang Seng index in Hong Kong gained 2.0 percent, while stocks in mainland China rose 1.5 percent.

With investors still intensely nervous after the roller-coaster ride of the past weeks, gold continued to push higher on Tuesday.

The precious metal, which is a traditional haven for investors in times of uncertainty, hit another nominal high during early Asian trading, topping $1,910 an ounce. By late afternoon in London, the price was hovering at around $1,883 an ounce.

Julia Werdigier reported from London. Jack Ewing contributed reporting from Frankfurt and Bettina Wassener contributed from Hong Kong.

Article source: http://feeds.nytimes.com/click.phdo?i=69048b3de134ef55b2621f8aeb84d2d3

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