The benchmark S&P 500 closed 0.3% higher while the Dow Jones Industrial Average rose 0.7%. The tech-heavy Nasdaq had lost 0.5% by the time the closing bell rang, driven by the decline of some of Wall Street’s high-tech companies.
The Nasdaq and S&P 500 had peaked last week.
The energy, materials and industrial sectors recorded some of the strongest gains in the blue-chip index, as a survey by the Institute for Supply Management showed that activity in the factory sector United States continued to increase at a rapid rate in April, even as the rate of the previous month.
The gauge came in at 60.7 last month after a 37-year high of 64.7 in March – leaving it well above the 50 line separating expansion from contraction. The April reading missed the Wall Street consensus forecast of 65 but showed that “activity in the sector is still expanding at a steady pace,” according to Thomas Simons, an economist at Jefferies.
The price of US government debt edged up after ISM data fell below estimates, pushing the 10-year treasury yield down 0.02 percentage points to just over 1, 6%.
“While the manufacturing sector is not expected to be a major driver of hiring during this next stage of the recovery, the perception that growth may have reached a stalling speed for the production of goods is a marginal concern, ”said Ian Lyngen, head of the United States. pricing strategy at BMO Capital Markets.
Across the Atlantic, the IHS Markit PMI of manufacturing activity in the euro area recorded 62.9 for the month, building on a reading of 62.5 in March, a sign that the economic strength of the bloc is improving.
“Eurozone manufacturing is booming, with a new PMI record set for a second consecutive month in April,” said Chris Williamson, chief economist at IHS Markit.
“Over the past two months, production and order books have improved at rates unmatched since the start of the survey in 1997, with growing demand spurred by the release of savings after the Covid-19 lockdowns and bright prospects for the year to come. ”
The German Xetra Dax and French CAC 40 indices closed up 0.7% and 0.6% respectively, bringing their advances for the year to over 11%. London markets were closed for a public holiday.
Investor sentiment was also supported by a strong recovery in corporate profits in the first three months of 2021 compared to the same quarter last year, when the coronavirus pandemic began to hit large companies.
According to FactSet data, the groups listed on the S&P 500 that have so far released quarterly numbers have reported overall year-over-year growth of 53%. Of the 306 groups that released their figures, 268 exceeded expectations.
A similar situation occurred in Europe, where companies listed on the Stoxx 600 recorded earnings growth of almost 75%. Overall, the benchmark’s average earnings exceeded analyst consensus expectations by 15%, the biggest ‘upside surprise’ since the recovery from the global financial crisis more than a decade ago. according to Goldman Sachs.
While reactions from individual stocks to bullish earnings have been mixed in the United States and Europe, signs of a strong recovery for many large companies have helped support stock prices, analysts said.
“The effect of the fiscal stimulus and post-Covid-19 rebound in consumer and business demand is leading to extraordinary levels of growth, especially in the United States, which is expected to persist for several more months,” said Linda Mazziotta at UBS Wealth Management. “In turn, this favorable macroeconomic environment is translating into a stronger-than-expected recovery in corporate profits.”
Another wave of results is expected this week, with companies such as Volkswagen and Siemens in Germany, PayPal and AIG in the US and Nintendo in Japan releasing financial reports.