U.S. Stocks Approach Five-Month Highs as Manufacturing Shows Signs of Life

The Dow and broader U.S. stock market surged on Wednesday after better than expected manufacturing data alleviated concerns of an abrupt slowdown in the economy. Tame inflationary pressures also reassured investors that the Federal Reserve will keep refrain from raising interest rates in the foreseeable future.

S&P 500, Nasdaq Hit Five-Month Highs

All of Wall Street’s major indexes finished significantly higher, with the S&P 500 Index of large-cap stocks gaining 0.7% to 2,810.92. The index peaked at 2,821.24, which would have marked the highest settlement since October.

All 11 of the S&P 500’s major components recorded gains. Health care and energy each rose 1.1% to lead all sectors. Industrials were also among the top performers, gaining 0.9%. Shares of consumer staples companies rose 0.7% on average.

Surging tech shares lifted the Nasdaq Composite Index to a gain of 0.7%, where it closed at 7,643.41.

The Dow Jones Industrial Average closed up 148.23 points, or 0.6%, at 25,702.89. It had gained more than 200 points earlier in the day.

Boeing Grounded  

Shares of Boeing Co (BA) declined for an eighth consecutive day as more countries grounded 737 MAX 8 planes following a deadly Ethiopian crash on Sunday.

U.S. President Donald Trump announced Wednesday that the Federal Aviation Administration would ground Boeing’s fleet of 737 MAX airliners over growing safety concerns. Effective immediately, the aviation regulator was stopping domestic airlines and others from using the Boeing planes in U.S. airspace.

“The airlines have been all notified,” Trump said, according to The Wall Street Journal. “The safety of the American people and all people is [of] paramount concern.”

Boeing’s stock has declined 15% over the past seven sessions, with losses accelerating this week as investors reacted to the Ethiopian Airline crash on Sunday.

Manufacturing Sector Extends Recovery

Stronger than expected economic data provided much of the catalyst for stock traders on Wednesday after the Commerce Department said U.S. durable goods orders rose for a third consecutive month.

Orders for manufactured goods meant to last three years or more climbed 0.4% in January, confounding expectations of a 0.5% drop. However, excluding the volatile transportation component, orders dipped 0.1%.

Orders for nondefense capital goods excluding aircraft, a key measure of business investment plans, jumped 0.8% from December, the highest since last summer.

Separate Commerce Department data also reported a sharp uptick in construction spending at the start of the year. Outlays rose 1.3% from December, more than triple the rate expected by analysts.

Meanwhile, the Labor Department confirmed that January’s muted inflation also extended to factory-gate prices as the producer price index (PPI) rose just 0.1% during the month. That translated into a year-over-year gain of 1.9%.

Core PPI edged up 0.1% in February and 2.5% compared to a year ago, official data showed.

Featured image courtesy of Shutterstock. Chat via Stockcharts.com.

Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi