The New York Stock Exchange rose overnight after a good manufacturing report buoyed investors.
The gains were broad-based. All 10 industry sectors in the S&P 500 finished higher, led by a 2% advance for energy companies after oil prices rose in the wake of the Institute for Supply Management (ISM) factory report.
The ISM said its survey of senior executives in the manufacturing sector saw its Index rise to 54.8% in April, from 53.4% in March. The new-orders index gained to 58.2% in April, from 54.5% in March. The production index was also up 2.7 percentage points, to 61.0%.
“This comes as a big surprise, because activity in the New York, Philadelphia and Chicago regions slowed materially last month,” Katy Lien, director of research and analysis at Global Forex Trading told CNN Money.
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“The details of the report showed strength in new orders, production, new export orders, employment, supplier deliveries and customer inventories.”
The S&P500 Index gained 0.57% to 1405.82.
The Dow Jones Industrial Average was also up 0.50% or 65.69 points to 13279.30.
The NASDAQ Index rose 0.13% or 4.08 points to 3050.44.
The Dow touched 13326.17 during trading – the highest reading since December 2007.
Former US Federal Reserve chairman Alan Greenspan said US shares are are likely to rise as corporate earnings increase over time.
“Stocks are very cheap,” Greenspan said overnight at a Bloomberg Washington summit, citing very low price-earnings (PE) ratios.”
“There is no place for earnings to grow except into stock prices.”
Greenspan served as the US central bank’s chairman from 1987 to 2006.
West Texas Intermediate (WTI) oil price rose 1.23% to $US106.16 a barrel overnight.
Gold was down 0.11% to be trading at $US1662.10 an ounce.
The Australian dollar was down overnight buying $US1.0336 at 8am.
European sharemarket rise
European sharemarkets rose overnight on the good news in the US and banks led a rally on London’s leading shares index today after taxpayer-backed Lloyds Banking Group’s first quarter trading update cheered investors.
The London FTSE 100 closed up overnight 1.30% to 5812.23.
The European Stoxx50 index was flat, up 0.01% to 2306.69.
Spain’s debt and record unemployment woes continue to make headlines, but optimism about Europe has come from the head of the world’s biggest bond holder.
Pimco CEO Mohamed El-Erian noted there has been some progress made to tackle the European Union’s debt crisis and Spain has not made the same mistakes as Ireland and Greece.
Looking three to five years out, El-Erian sees a stronger Eurozone.-
“The good news is Spain is not Greece in the sense that it doesn’t have the deficit and debt issues of Greece nor does it have a dysfunctional public administration,” El-Erian told CNN Money in Los Angeles overnight.
“The good news is also that Spain hasn’t made the fatal decision that Ireland did, which is to assume the debt of an irresponsible private sector.”
But growing political opposition to budget austerity forced Italy to delay its goal of balancing the budget to 2014. Spain also missed fiscal targets, amid a worsening recession. French President Nicolas Sarkozy may be toppled in a May 6 vote by a socialist challenger who wants to reverse budget tightening measures. France has not balanced its books since the 70s. The Netherlands will hold elections in September after the Government fell over opposition to spending cuts and tax increases.
The Washington-based International Monetary Fund said in an April 17 report growth in Europe will shrink to 0.3% this year.