Stocks Gain Afternoon Momentum Despite Weak China Manufacturing Data
NEW YORK (TheStreet) -- U.S. stocks closed higher Monday, offsetting earlier losses after manufacturing in China contracted and tensions in Ukraine rose. Key bank stocks were lower.
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- The Dow Jones Industrial Average closed 0.11% higher to 16,530.55, while the S&P 500 increased 0.19% to 1,884.66. The Nasdaq added 0.34% to 4,138.06.
- Economic data was broadly positive. The ISM Non-Manufacturing Index beat expectations with an April result of 55.2, up from 53.1 in March. The Markit PMI services index was 55 in April, down from 55.3 in March as job creation fell to a 13-month low. The result beat flash estimates of 54.2.
- "The ISM non-manufacturing index is consistent with GDP growth of about 2.5% annualised, but we wouldn't be surprised to see it strengthen further over the next few months and we currently expect that second-quarter GDP growth will be as high as 3.5%," Capital Economics Chief U.S. Economist Paul Ashworth told clients.
- Pfizer (PFE) dropped 2.6% after it reported first-quarter earnings of 57 cents a share on revenue of $11.29 billion, missing analysts' estimates on the top-line. The earnings announcement arrived after AstraZeneca (AZN) on Friday rejected Pfizer's sweetened bid that values AstraZeneca at $106 billion.
- Target (TGT) shares shed 3.5% after CEO Gregg Steinhafel resigned on Monday, with Chief Financial Officer John Mulligan replacing him on an interim basis. The company had an embarrassing data breach over the holidays.
- JPMorgan (JPM) fell 2.5% after it said on Friday that revenue in fixed-income and equities trading would drop about 20% from a year earlier.
- Goldman Sachs (GS) and Bank of America (BAC) were also lower, down 1.6% and 1.1%, respectively.
- Sotheby's (BID) was up 3.3% after agreeing Monday to give Daniel Loeb's hedge fund Third Point LLC board seats and the option to lift his stake.
- Tensions in Ukraine heightened over the weekend as pro-Russian militants burst into a Ukrainian police station in Odessa on Sunday, freeing about 70 activists.
- The DAX in Germany closed 0.28% lower and the Hong Kong Hang Seng was down 1.28%. Markets in London and Tokyo were closed for public holidays.
- Manufacturing in China contracted in April for the fourth straight month, according to the HSBC's purchasing managers' index released on Monday. U.S. stocks closed lower Friday, erasing early gains after April's jobs report showed a falling work force participation rate.
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