U.S. Indexes Jump 1% on Manufacturing Reports and Deals

Nichole Harper
16 Dec, 2013
New York City

U.S. indexes jumped 1% after two separate economic reports showed growing manufacturing activities. Also two large deals supported a broader market advance. LSI agreed to a $6.6 billion deal. AIG agreed to sell its aircraft leasing unit for $5.4 billion.

[R]12:10 PM New York – U.S. indexes jumped 1% after two separate economic reports showed growing manufacturing activities. Also two large deals supported a broader market advance. LSI agreed to a $6.6 billion deal. AIG agreed to sell its aircraft leasing unit for $5.4 billion.[/R]

Stocks in New York advanced and extended year-to-date gains as investors saw fresh signs of economic momentum.

Investors also looked ahead to a Fed announcement on Wednesday and look for clues to bond purchase plan.

The Fed’s monthly purchase of $85 billion of bonds has supported a broad advance in market indexes and the S&P 500 index in the year has jumped 26%.

S&P 500 index gained 12.01 or 0.7% to 1,787.32 and the Nasdaq Composite Index added 28.63 or 0.7% to 4,029.61.

European Markets Advance

In European trading, market indexes advanced and extended gains after indexes opened higher in New York.

In London trading, FTSE 100 index climbed 1.3% or 82 to 6,522 and in Frankfurt the DAX index jumped 1.9% or 169.37 to 9,176.

In Paris, CAC 40 index increased 1.5% or 61.53 to 4,121.

Japan, China Lead Asian Markets Lower

Japanese investors took a cautious view and locked yearly gains and the yen edged lower.

Investors also noticed a decline in Chinese manufacturing growth rate and awaited a decision this week from the U.S. Fed policy meeting.

The Nikkei 225 Stock Average declined 250.20 or 1.6% to 15,152.91 and the Topix dropped 15.93 to 1,222.95.

The yen closed at 102.83 against one dollar.

Fed Report - Industrial Production Rises

Industrial production increased 1.1% in November after gaining only 0.1% in the previous month, a report from the Fed showed.

The November month increase was the largest in a year since 1.3% increase in the same month last year.

U.S. Manufacturing Activities Expand

A private survey of manufacturing activities in the U.S. showed an increase in December. The industry report showed that manufacturing growth rate slowed but employment rate increased at a faster pace in the month.

U.S. Manufacturing Purchasing Managers Index declined to 54.4 from a 10-month high of 54.7 in November. Any measure above 50 shows an expansion.

The employment sub-index rose to 53.7 in the month from the revised and final 52.3 in November. However, the output sub-index eased to 57.3 from 57.4 in November.

Manufacturing growth appears to have accelerated to an annualized rate of approximately 4%, said Chris Willamson, Chief Economist at Markit.

U.S. Stocks in Review

American International Group Inc ((AIG)) increased 1.5% or 72 cents to $50.45 after the reached a deal to sell its 100% interest in International Lease Finance Corp to AerCap Holdings N.V. for $5.4 billion.

The transaction is expected to close in the second quarter of 2014.

LSI Corporation surged 38.6% or $3.06 to $10.97 after the storage and networking chip developer agreed to be acquired by Singapore-based chip maker Avago Technologies Ltd for $11.15 a share in a deal valued at $6.6 billion.