While you were sleeping: US economy gathers pace

While you were sleeping: US economy gathers pace

May 6 (BusinessDesk) – Wall Street advanced in late afternoon trading as better-than-expected services sector data outweighed concern about the escalating crisis in Ukraine.

With about an hour of trading left in the day in New York, the Dow Jones Industrial Average rose 0.16 percent, while the Standard & Poor’s 500 Index gained 0.09 percent, and the Nasdaq Composite Index added 0.15 percent.

Gains in shares of Boeing and Visa, up 1.7 percent and 1.3 percent respectively, led the Dow higher. JPMorgan slumped 2.7 percent after warning late on Friday that it expects bond and equity trading revenue to drop in the second quarter.

There was good news on the economic front, already lifted by a recent string of data showing that the world’s largest economy is emerging stronger than anticipated from a harsh winter. The Institute for Supply Management said its services sector index climbed more than expected to 55.2 in April, up from 53.1 in March.

"It's more confirmation the economy is strengthening and we are headed for stronger growth," Peter Cardillo, chief market economist at Rockwell Global Capital in New York, told Reuters.

The services data comes on the heels of Friday’s better-than-expected April jobs report. Trade data is due on Tuesday in Washington.

In corporate news, shares of Pfizer fell, last down 2.7 percent, as revenue disappointed at a time the company is pursuing a takeover of the UK’s AstraZeneca which, if successful, would rank as one of the biggest deals ever.

Shares of Target also dropped, last down 3.2 percent, after the company said Gregg Steinhafel would step down, effective immediately, from his role as CEO. CFO John Mulligan has been appointed interim president and CEO until a replacement has been found. Target is trying to recover from a data breach scandal in 2013.

In Europe, the Stoxx 600 Index ended with a decline of 0.3 percent from the previous close, as did Germany’s DAX. France’s CAC 40 eked out a 0.1 percent gain. Trading in London was closed today for the May Day holiday.

The European Commission tweaked its growth outlook for the euro region, saying it now is forecasting economic expansion at 1.7 percent in 2015, compared with an earlier 1.8 per cent forecast. Inflation will remain stubborn at 0.8 percent in 2014 and 1.2 percent in 2015, below the European Central Bank’s target of 2 percent.

The intensifying conflict in eastern Ukraine weighed on equity markets on both sides of the Atlantic, while adding to the appeal of bullion. Gold futures for June delivery gained 0.5 percent to settle at US$1,309.30 in New York.

“The rising tension in Ukraine is adding to investors’ reduced risk appetite,” Kai Fachinger, a money manager at RobecoSAM in Zurich, told Bloomberg News.

(BusinessDesk)

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