Stocks Gain as Weak Economic Data Bolsters Fed Stimulus
NEW YORK ( TheStreet) -- U.S. stocks gained Monday on prospects that worse-than-expected manufacturing data will prompt the Federal Reserve to continue its stimulus program to bolster the economic recovery.
The S&P 500 advanced 0.6% to close at 1,640.39.
The Institute for Supply Management reported that the ISM manufacturing survey for May fell to 49 from 50.7 in April; economists were expecting levels to remain at 50.7. At the same time, the Census Bureau said that constructing spending rose by a less than expected 0.4% in April after dipping by an upwardly-revised 0.8% in March. Economists, on average, had estimated a construction spending increase of 0.8% in April.
Markit reported earlier Monday that the final estimate on the U.S. Manufacturing Purchasing Managers Index for May was 52.3, modestly higher than the final April reading of 52.1."We can now say with even more confidence that there is literally zero chance the Fed announces any adjustments to its QE program in June and along with the decline in inflation measures, the risks are growing that our September call looks optimistic," Dan Greenhaus, chief global strategist at BTIG in New York commented in a note after the ISM manufacturing report. The Dow Jones Industrial Average gained 0.9% to 15,254.03 while the Nasdaq rose 0.3% to 3,465.37. Intel (INTC - Get Report) jumped 4% to $25.24 after the chipmaker was raised to "outperform" from "market perform" by FBR Capital analysts, who wrote that the company exhibits strong growth potential despite the sharp deterioration in the PC market. Bristol-Myers Squibb (BMY) gained 3.4% to $47.59 while Merck (MRK - Get Report) added 3.8% to $48.45. The anti-PD-1 therapies from Bristol-Myers Squibb and Merck stole the show during the weekend's American Society of Clinical Oncology (ASCO) annual meeting. Merck was able to feature stunningly good results, while Bristol-Myers continued to show that its Nivolumab has the potential to be a blockbuster melanoma drug, but even more enticing is the potential for the drug to re-write the lung cancer treatment playbook. Lam Research (LRCX - Get Report) advanced 3.2% to $48.25 after Needham analysts raised their price target on the supplier of equipment to the semiconductor industry to $60 from $53, anticipating that the company is poised for stronger revenue growth than its competitors. Follow @atwtse Written by Andrea Tse in New York >To contact the writer of this article, click here: Andrea Tse.
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