Wall Street rallies after strong US data

Traders working on the floor of the New York Stock Exchange on March 1, 2016.
Traders working on the floor of the New York Stock Exchange on March 1, 2016. PHOTO: AFP

NEW YORK (REUTERS) - Upbeat US manufacturing data and another jump in oil prices on Tuesday (March 1) pushed a leading gauge of global stocks to its highest in nearly two months.

US stocks led the way, with bank shares up more than 3 per cent after the strong data refreshed expectations that the Federal Reserve may raise rates later this year.

US construction spending rose to the highest level since October 2007 and a measure of the US manufacturing sector outpaced analysts' expectations across the board.

"If the manufacturing sector is now rebounding, that's very bullish," said Jonathan Lewis, chief investment officer at Fiera Capital Inc in New York. "The (manufacturing) data was an accelerant," he said.

The US data, alongside expectations of further support from major central banks, soothed fears over a slowing global economy.

"That reminded people we have more central banks to come this month," Mr Lewis said. "We get European Central Bank, Bank of Japan and the Federal Reserve, so we're probably getting set up for a nice middle of the month."

The Dow Jones industrial average rose 348.58 points, or 2.11 per cent, to 16,865.08, the S&P 500 gained 46.12 points, or 2.39 per cent, to 1,978.35 and the Nasdaq Composite added 131.65 points, or 2.89 per cent, to 4,689.60.

It was the largest daily percentage gain since early January for the S&P 500. MSCI's global gauge of equity markets rose 1.8 per cent, touching its highest level since Jan. 8.

The US manufacturing data also prompted investors to strengthen their outlook on a possible US interest rate increase by year-end.

Fed funds futures on Tuesday implied traders see a 58-per cent chance of the US central bank raising rates at its December policy meeting, higher than the 30 per cent chance on Monday and more than four times greater than the 12 per cent chance seen a month earlier, according CME Group's FedWatch tool.

Oil prices followed equities higher and have risen in seven of the past 12 sessions. Brent, the global benchmark, was down 0.2 per cent at US$36.49 a barrel after settling up 0.7 percent at US$36.81. US crude settled up 1.9 per cent at US$34.40 a barrel and was last up 0.5 per cent at US$33.91.

Equities' surge pushed investors out of traditionally safe assets like US government bonds, gold and the Japanese yen.

The benchmark 10-year Treasury note fell 25/32 in price to yield 1.825 per cent, up from 1.74 per cent late on Monday.

The US dollar rose more than 1 per cent against the yen, rebounding after its worst month against the Japanese currency since 2008.

Gold fell 0.5 per cent to US$1,231.67. It rose more than 10 per cent in February, the most for any month in four years.