U.S. equity index ETFs finally snapped their six-day losing streak to finish higher, thanks to some encouraging reads on manufacturing in the U.S., China and Europe, despite a lackluster weekly jobless claims figure and a halt in trading on the Nasdaq.
The second-largest U.S. stock exchange ceased trading on all securities, remaining dormant for three hours before re-opening, as a result of a technology issue. The outage led to what was easily the lowest full-session volume of the year, with about 4.23 billion shares changed hands, well below the daily average.
Stocks climbed out of the gate after upbeat survey data from China and the Eurozone reassured investors. China’s HSBC preliminary Manufacturing PMI Index surprisingly improved to 50.1 for August, from 47.7 in July, exceeding expectations. This was the first reading above the key level of 50, which denotes expansion, since April. Meanwhile, the Eurozone Services PMI Index rose to 51.0 in August, from 49.8 in July, and compared to the 50.2 level that economists had anticipated. This was the first reading above the key level of 50 in 19 months, led by growth out of Germany.
In light of the stronger-than-expected services report, the Eurozone Composite PMI Index – a gauge of business activity in the manufacturing and services sectors – improved to 51.7 this month, from 50.5 in July, above the 50.9 that was anticipated.
The economic data provided a boost to growth-sensitive sectors as five of six cyclical groups registered gains larger than 1.0%. The technology sector lagged with an advance of 0.5%. Dow member Hewlett-Packard endured its worst session in two years, falling 12.5%, after reporting in-line results and saying it is unlikely to experience revenue growth in 2014.
Interestingly, the discretionary sector also finished among the leaders despite weakness in the retail space. Today upbeat data overshadowed nervousness over the winding down of the Federal Reserve’s stimulus program.
The Markit’s preliminary U.S. Manufacturing PMI inched ahead 0.1 points to 53.9 in August, indicating steady growth. Meanwhile, unemployment insurance claims rebounded 13,000 last week to 336,000. Economists expected a rise of 10,000 to 330,000.
The Conference Board’s Leading Economic Index increased 0.6% in July. The improvement was widespread, with eight of the ten indicators advancing. Over the past six months, the index has risen 2.0%. Growth is expected to moderately accelerate through the rest of the year.
Our Trend Tracking Indexes (TTIs) showed renewed upward momentum and closed the day at +1.69% (Domestic TTI) and +5.17% (International TTI).