Stocks buoyed by strong manufacturing data
Stocks in the US surged higher on Thursday as a deluge of better than expected economic news helped buoy the broader indices. Jobs data along with stronger than expected manufacturing were the catalyst for higher stock prices, despite a surprising earnings miss from oil giant Exxon Mobile. Yield on the 10-year bond also moved higher, capping the upside for equity gains.
Prior to the opening bell the Labor Department released its weekly Initial claims. Benefits dropped 19,000 to 326,000, the lowest level since January 2008. Economists had expected claims to rise to 345,000 last week. The four-week moving average for new claims, which irons out week-to-week volatility, fell 4,500 to 341,250. The strong claims report got stocks off to a solid start on the first day of the month which usually sees strong inflows.
Stocks continued to gain after the US purchasing managers index was released at 1400 GMT. Manufacturing activity in the U.S. expanded at the fastest rate since April 2011 in July. According to the Institute of Supply Management the purchasing managers rose to 55.4 in July from a reading of 50.9 in June. Analysts had expected the ISM index of purchasing managers to rise to 52.0 last month. The report showed that the ISM subcomponent on prices fell to 49.0 from 52.5 in June. The New Orders Index registered 58.3 in July, while the Employment Index rose to 54.4.
The Dow was the worst performing of the indices, with Exxon dragging on the broad index. Exxon (NYSE:XOM) reported profit of $6.9 billion, or $1.55 a share, compared with $15.9 billion, or $3.41 a share, a year ago. Analysts had been expecting a per-share profit of $1.90. Revenue decreased 16% to $106.5 billion.
The Russell 2000 was the best performing major index moving to an all-time high, climbing more than 1.4%.
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