Benchmarks closed in the green on Monday as U.S. manufacturing activity rebounded in January and heavyweight technology shares gained. Investors turned to positive news and shrugged of coronavirus fears.
The Dow Jones Industrial Average (DJI) rose 143.78 points or 0.5%, to close at 28,399.81 and the S&P 500 rose 23.40 points or 0.7% to close at of 3,248.92. While, the Nasdaq Composite Index closed at 9,273.40, gaining 122.47 points or 1.3%. The fear-gauge CBOE Volatility Index (VIX) decreased 4.6% to close at 17.97. Advancing issues outnumbered declining one for a 1.99-to-1 ratio on the NYSE and a 2.01-to-1 ratio on the Nasdaq favored advancers.
How Did the Benchmarks Perform?
Fears of coronavirus outburst has been weighing on investors sentiment and dragging the major benchmarks lower in the past week. Ten of the 11 major S&P 500 sectors gained, however with the drop in crude price the energy sector lagged.
Overall, the S&P index recorded 24 new 52-week highs and 9 new lows. On the other hand, Nasdaq recorded 54 new highs and 66 new lows.
U.S. Manufacturing Activity Rebounds in January
According to the Institute for Supply Management’s (ISM) report on Monday, the U.S. manufacturing sector grew in January to 50.9, beating the consensus estimate of 48.6. The figure is a 3.1% increase from the seasonally adjusted December reading of 47.8. Easing of trade tensions with China and signing of a new trade deal with Mexico and Canada effectively boosted manufacturing activities.
There has been a surge in new orders that had been contracting from five straight months. Manufacturing accounts to 11% of the U.S. economy and a reading above 50 indicates expansion in the sector. The sub-indexes showed substantial growth as ISM’s forward-looking new orders rose to 52.0, the highest since May 2019. Additionally, ISM’s factory employment index picked up to 46.6 in January, the sector added 46,000 jobs in 2019.
Coronavirus Death Toll Keep Climbing
China on Monday reported at least 361 confirmed deaths and total number of people infected with coronavirus roughly around 17,205. Hong Kong also reported one dead from the virus along with massive protest to closed down border with mainland China.
In the U.S., number of confirmed cases rose to 11, including a second person-to-person transmission inside the country. On the other hand, administration intends to keep ban on travellers from China to contain the coronavirus outbreak along with plans to evacuate more Americans from China.
Travel and logistics companies have been continuously facing the brunt from coronavirus outburst. Monday Carnival Corporation & Plc (CCL - Free Report) reported that one of its guests was tested positive with coronavirus six days after leaving one of its cruises. Shares of Carnival Corporation, a Zacks Rank #3 (Hold), dropped 1.8% on Monday.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Construction Outlays Decline
On Monday, the Commerce Department said construction spending fell 0.2% in December, which had a consensus estimate of 0.5% increase. The seasonally adjusted rate stood at $1,327.7 billion,which is below the revised November estimate of $1,329.9 billion. Overall in 2019, the value of construction was $1,303.5 billion, 0.3% below the $1,307.2 billion spent in 2018.
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