Wall Street Rally Lifts World Markets, Jobless Claims Fall

Nichole Harper
01 Aug, 2013
New York City

U.S. stocks jumped on the first day of August as financial, industrial and consumer sector stocks led the advance. Weekly jobless claims declined more than expected and manufacturing sector advanced. Construction spending weakened. European central banks left rates unchanged.

[R]11:40 AM New York – U.S. stocks jumped on the first day of August as financial, industrial and consumer sector stocks led the advance. Weekly jobless claims declined more than expected and manufacturing sector advanced. Construction spending weakened. European central banks left rates unchanged.[/R]

U.S. stocks jumped on the first trading day of August and the broad advance in stocks lifted the S&P 500 index above 1,700 for the first time.

Major market averages recorded best July month gains since 2010 on the sharp gains in industrial and financial stocks. The S&P 500 index has gained 19% and the Nasdaq Composite Index has advanced 21% in the year so far.

Economic Reports Suggest Modest Recovery

Weekly jobless claims declined 19,000 to a seasonally adjusted 326,000, Labor Department said today. The weekly claims fell to a 5-year low.

A separate report from consultants Challenger, Gray & Christmas said planned layoff at U.S. employers declined modestly in July to 37,701.

Investors are looking ahead of employment report form the government tomorrow and economists are estimating a gain of 184,000 compared to an increase of 195,000 in June.

Modest economic recovery was evident in the manufacturing report released by the Institute for Supply Management. With the new orders increase, U.S. manufacturing sector growth accelerated at the fastest pace since June 2011.

However, Commerce Department said construction spending declined 0.6% in June to an annual rate of $884 billion, the largest monthly decline since January.

European Markets

European markets traded higher and 15 of the 17 largest markets in the European Union advanced.

Market indexes in London added 0.4% in Frankfurt gained 1.4% and in Paris advanced 0.7%.

The Bank of England and the European Central Bank left their reference rates unchanged, as expected by most economists.

ECB President Mario Draghi said early indications show that the economies across the euro zone are stabilizing and interest rates will remain low for an extended period.

A private survey of euro zone manufacturing index showed an expansion for the first time in two-years.

The survey conducted by Markit said final read on its manufacturing index was 50.3, any reading above 50 indicates expansion.

Asian Markets

Market indexes across Asia closed mixed and the Nikkei index in Tokyo jumped 2.5% after China said manufacturing expanded.

Purchasing Managers’ Index increased to 50.3 in July from 50.1 in June, Chinese government said in a report today. The increase was larger than expected and showed manufacturing sector is stronger than earlier believed.

In a separate manufacturing report released by HSBC that assigns higher weighting to private sector manufacturing released after the official report showed activities declined for the third month in a row to the lowest level in a year on weaker new orders.

Hang Seng index in Hong Kong gained 0.9% and the Shanghai Composite Index increased 1.6% and Kopsi Index in Seoul added 0.4%.

In Mumbai, the rupee declined 0.5% to 60.65 against one dollar and the Australian dollar dropped to a 3-year low after the latest read on second quarter inflation showed an increase of 0.6% prompting more calls for a rate cut.

In Mumbai, Reliance Communications Ltd, third largest mobile carrier reported net income declined 33% to $18 million in the quarter to June.

The Sensex index in Mumbai declined for the seventh day in a row and Financial Technologies India Ltd plunged 65% after a commodities exchange it controls suspended trading in single-day forward contracts.