Traders returned to Wall Street on Tuesday from a long holiday weekend and promptly began to buy.
Shares in Europe and Asia were also higher as investors tried to recover losses that piled up after a string of disappointing economic reports.
The jump as investors looked past a report that growth in services businesses slowed last month. The Institute for Supply Management, a trade group of purchasing executives, said its index of services companies fell to 53.8 last month from 55.4 in May.
Economic reports have routinely fallen short of economists’ forecasts in recent months. That has investors worried that the growth is not coming as quickly as expected and any expansion will be slow for a prolonged period.
Weak data from major economies over the last few weeks has diminished confidence in a strong rebound from last year’s recession and unnerved markets, many of which are in the red so far this year.
But after days of selling, some investors felt some stocks had become cheap, making it a ripe time to buy. In late morning trading, the Dow Jones industrial average rose 140.17 points, or 1.45 percent. The Standard & Poor’s 500-stock index rose 1.64 percent, while Nasdaq jumped 1.85 percent.
The rise in shares, which was led by bank stocks, was across the board.
Bond prices traded in a narrow range Tuesday. The yield on the benchmark 10-year Treasury note was unchanged at 2.98 percent compared with late Friday
In Europe, the FTSE 100 index in London was 2.65 percent or 127.76 points higher, and the DAX in Frankfurt was up 2.57 percent. The CAC-40 in Paris gained 3.1 percent. Asian indexes also closed higher.
Analysts, however, were quick to acknowledge that the fundamental outlook for the world economy was not any better than last week — when United States jobs data proved disappointing and surveys showed global manufacturers were bracing for harder times and consumer spending was slowing.
“This was merely a technical recovery, and we see no convincing evidence of any positive changes in economic fundamentals,” said Zhang Gang, an analyst for Central China Securities in Shanghai.
Stocks retreated Friday, the last trading day before the Fourth of July holiday after a report that showed employers did not ramp up hiring as much as economists had forecast. It was the second straight month hiring by private employers failed to meet expectations.
With little in the way of economic indicators this week, many European traders are looking ahead to central bank policy announcements on Thursday. The European Central Bank and Bank of England are expected to leave their interest rates at historical lows. The European bank will be watched closely for comments on the outlook for economic growth, bank lending, and developments in markets amid the debt crisis.
The European Union has promised to publish bank stress tests in a bid to convince markets that the financial sector is healthier than some fear. Those results could come on July 23, and what the European Central Bank has to say about them could drive market sentiment either way.
In Asia, sentiment was helped somewhat on Tuesday by the Reserve Bank of Australia’s statement on the prospects for the Australian economy, which is closely tied to Chinese demand for its ore and other minerals. Leaving interest rates unchanged after a series of increases, the central bank said Australia’s economic growth was on track and China’s expansion was “starting to moderate to a more sustainable rate.”
China led Asia’s gains with the Shanghai composite index climbing off a 15-month low. The index jumped 45.48 points, or 1.9 percent, to 2,409.42.
Japan’s Nikkei 225 stock index added 71.26, or 0.8 percent, to 9,338.04, and Hong Kong’s Hang Seng rose 1.2 percent to 20,084.10.
By NYTimes
Tags: bank of england, bank stock, businesses, consumer spending, Dow Jones Industrial, economic growth, economic reports, economists, european central bank, investors, Nasdaq composite, wall street, world economic
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