While you were sleeping: Global outlook brightens
May 23 (BusinessDesk) – Wall Street rose amid signs of better-than-expected manufacturing in the US and China, while there was also a sign of life in the US housing industry bolstering shares including Home Depot.
With about an hour of trading left in the day in New York, the Dow Jones Industrial Average added 0.17 percent, the Standard & Poor’s 500 Index rose 0.39 percent, while the Nasdaq Composite Index climbed 0.72 percent.
Gains in shares of Home Depot and United Health, up 1.2 percent and 1 percent respectively, led the Dow higher, outweighing declines in shares of Coca Cola and Cisco, down 0.8 percent and 0.5 percent respectively.
There was a welcome sign of improvement in the US housing industry. A report by the National Association of Realtors showed existing home sales climbed 1.3 percent in April to an annual rate of 4.65 million units. It was the first gain this year.
“Some growth was inevitable after sub-par housing activity in the first quarter, but improved inventory is expanding choices and sales should generally trend upward from this point,” Lawrence Yun, NAR chief economist, said in a statement. “Annual home sales, however, due to a sluggish first quarter, will likely be lower than last year.”
"This report provides the first crucial sign that the housing recovery may be on the verge of a rebound," Millan Mulraine, deputy chief economist at TD Securities in New York, told Reuters.
Separately, Markit’s preliminary index of US manufacturing rose to 56.2 in May, from 55.4 in April. Still, a higher than expected number of Americans filed for jobless claims in the week ended May 17.
"We have been in a 'two steps forward, one step back' progression on the domestic economy and that can be extended to the global economy as well," Jim Russell, senior investment strategist at US Bank Wealth Management in Cincinnati, told Reuters.
Shares of Best Buy advanced, last up 1.6 percent to US$25.75 after earlier rising as high as US$27.50, after the consumer-electronics retailer reporter a better-than-expected first-quarter profit.
In Europe, the Stoxx 600 Index ended the session 0.2 percent higher than the previous close, as did Germany’s DAX and France’s CAC 40. The UK’s FTSE 100 inched nearly 0.1 percent higher.
Markit’s eurozone PMI Composite Output Index fell to 53.9 in May, down from 54.0 in April and the lowest level in two months.
“A slight easing in the euro area’s rate of growth was seen in May but doesn’t change the picture of a region that’s enjoying its best spell of growth for three years, especially when an acceleration in growth of new orders suggests that the pace of expansion could pick up again in June,” Chris Williamson, chief economist at Markit, said in a statement
In China, a preliminary purchasing managers’ index from HSBC and Markit climbed to 49.7 in May, the highest level in five months, offering reason for optimism about the world’s second-largest economy.
“The improvement was broad-based with both new orders and new export orders back in expansionary territory,” Hongbin Qu, chief economist, China & co-head of Asian economic research at HSBC, said in a statement. “Disinflationary pressures also eased over the month and output prices increased for the first time since November 2013.”
“Downside risks to growth remain, particularly as the property market continues to cool,” he added. “We think more policy easing is needed to put a floor under growth in the coming months.”