Service growth boosts Wall Street
The first growth in the US service industry in a year and an upgrade of big banks boosted Wall Street after a two-week slide.
The Dow Jones industrial average added 112 points today after the Institute for Supply Management said its service index rose for the first time since August 2008.
Financial and energy stocks led the gains after Goldman Sachs raised its rating on large banks and the price of oil jumped.
The advance follows the market’s first two-week slide since July, which came as reports on manufacturing and consumer sentiment fell short of expectations.
Thomas J Lee, chief US equity strategist at JP Morgan, said the improvement in the service index was encouraging because it could help boost confidence in the economy.
The Dow rose 112.08, or 1.2%, to 9,599.75. The broader Standard & Poor’s 500 index rose 15.25, or 1.5%, to 1,040.46, and the Nasdaq composite index rose 20.04, or 1%, to 2,068.15.
Mr Lee said the market’s two-week drop was a healthy sign of caution.
He also said the mixed economic readings were not surprising and do not mean the rally is over.
“We should be kind of looking for data to come in a little choppy because no recovery is going to be linear and smooth,” he said.
Investors could begin to get a better sense of the health of the economy on Wednesday when quarterly earnings reports start arriving.
Aluminium maker and Dow component Alcoa. kicks off earnings season, and investors will be looking for signs of growth to ease recent concerns about the strength of a rebound.
Crude oil rose 46c to settle at $70.41 a barrel on the New York Mercantile Exchange as the dollar weakened. The dollar fell against most other currencies, while gold prices rose.
Five stocks rose for every one that fell on the New York Stock Exchange, where volume came to 1.1 billion shares compared with 1.4 billion traded on Friday.
