Upbeat China, U.S. manufacturing data push Wall Street higher

NEW YORK (Reuters) – U.S. stocks rallied on Monday, starting off the new quarter on a strong note, as upbeat manufacturing numbers from the United States and China eased worries about slowing global growth.

FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) shortly after the opening bell in New York, U.S., March 26, 2019. REUTERS/Lucas Jackson/File Photo

The benchmark S&P 500 index, which is trading about 2.3 percent below its record closing high in September, triggered a “golden cross” pattern, in which its 50-day moving average crosses above its 200-day moving average. Many believe the technical signal could portend more gains for stocks in the short term.

Spurring gains in global equities, China’s manufacturing sector unexpectedly returned to growth for the first time in four months in March.

“The Chinese numbers bounced back, and people are taking more risk today because of it,” said Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.

U.S. manufacturing numbers also came in better-than-expected in March, helping investors overlook soft retail sales data for February.

The Dow Jones Industrial Average rose 280.59 points, or 1.08 percent, to 26,209.27, the S&P 500 gained 27.83 points, or 0.98 percent, to 2,862.23 and the Nasdaq Composite added 89.08 points, or 1.15 percent, to 7,818.40.

Concerns about a global economic slowdown had come to the fore after the Federal Reserve announced that its monetary tightening policy cycle would end earlier than expected. The shift in Fed policy drove yields on 10-year Treasury notes below those of three-month bills last week for the first time in more than a decade.

Yields on 10-year notes have since risen back above three-month bill rates and on Monday hit a one-week high. The rise in 10-year Treasury yields helped lift financial shares, which provided the biggest boost to the S&P 500 among the index’s 11 sectors. S&P 500 bank shares jumped 2.6 percent.

Concerns about slowing momentum have not entirely dissipated. With the first-quarter earnings season about two weeks away, investors are bracing for what may be the first U.S. profit decline since 2016. Analysts expect quarterly earnings to fall 2 percent, according to Refinitiv data.

Still, on Monday, most S&P sectors posted gains. Only consumer staples, real estate and utilities shares, which tend to decline as 10-year Treasury yields rise, were in the red.

Auto shares rose after China’s State Council said on Sunday that the country would continue to suspend additional tariffs on U.S. vehicles and auto parts after April 1.

General Motors Co shares rose 1.5 percent and Ford Motor Co shares gained 2.2 percent.

Chipmakers, which get a large part of revenue from China, also rose. The Philadelphia Semiconductor index added 2.4 percent.

Shares of Wynn Resorts Ltd jumped 7.8 percent, the most among S&P companies, as March gambling revenue from the Chinese territory of Macau rose from the previous month.

Lyft Inc shares tumbled 11.5 percent as brokerage Guggenheim Securities started coverage of the ride-hailing start-up’s shares with a ‘neutral’ rating. The company debuted on the Nasdaq on Friday.

Advancing issues outnumbered declining ones on the NYSE by a 2.66-to-1 ratio; on Nasdaq, a 1.99-to-1 ratio favored advancers.

The S&P 500 posted 60 new 52-week highs and no new lows; the Nasdaq Composite recorded 64 new highs and 28 new lows.

Reporting by April Joyner in New York; Additional reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru; Editing by Shounak Dasgupta and Nick Zieminski

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