Investing.com – After Wall Street ended February on a sour note with the first three-month losing streak for both the S&P and Nasdaq since 2011, U.S. stocks began March on solid footing after better-than-expected data flow as they decoupled oil prices immersed in choppy trading on Tuesday.
At 16:25GMT or 11:25AM ET, the Dow 30 rose 216 points or 1.31%, while the S&P 500 traded up 28 points or 1.47% and the tech-heavy NASDAQ Composite gained 82 points or 1.81%.
Though manufacturing activity in the U.S. contracted again in February, it did so at a slower pace than in the preceding month. The Institute for Supply Management said its index of purchasing managers inched up to 49.5 last month from a reading of 48.2 in January. Analysts had expected the manufacturing PMI to rise to 48.5 in February.
In Markit’s own report for the same month, the activity level came in at 51.3, revised up from the flash reading of 51.0. Levels above 50 indicate an expansion in the manufacturing sector.
Furthermore, U.S. construction spending surged in January to the highest level since 2007, in the latest indication that the economy was regaining momentum after slowing in the fourth quarter.
Investors will remain wary of the pending release of the monthly jobs report on Friday as the final big data piece for the Federal Reserve to digest before their next monetary policy meeting on March 15 and 16.
Meanwhile, Meanwhile, New York Fed president and FOMC member William Dudley noted his concern about the outlook in a speech delivered in China on Tuesday. “At this moment, I judge that the balance of risks to my growth and inflation outlooks may be starting to tilt slightly to the downside,” Dudley said.
The comments suggested that the Fed may wait longer before embarking on the next interest rate hike.
Traders also eyed choppy movements in crude as early gains due to indications that U.S. shale oil drillers are cutting back on production took the barrel of West Texas above $34 to a two-month high, gave way to the increased unlikelihood of a production cut coming any time soon from major oil producers. According to OPEC sources and delegates cited by Reuters, it is “very unlikely” that the oil producing group will cut production at its June meeting since it would be too soon to see how fast Iranian production is increasing.
West Texas managed to recover from earlier losses with crude oil futures for April delivery on the New York Mercantile Exchange advancing $0.20, or 0.59%, to trade at $33.95 a barrel by 16:30GMT, or 11:30AM ET, while Brent oil fell $0.07 or 0.19% to $36.50.
In company news, U.S. automakers reported broadly positive monthly sales with Ford Motor (N:F) surging more than 3% after reporting a 20% increase in its sales for February. General Motors (N:GM) managed to trade with gains of near 0.6% despite a 1.5% in its own sales, although the company noted that the drop was due to a 39% annual decrease in shipments to rental car companies.
In M&A activity, United Technologies (N:UTX) tumbled more than 3% and led the losses on the Dow after Honeywell International Inc (N:HON) scrapped its acquisition offer, while Intercontinentalexchange Group Inc (N:ICE) slumped 3.5% after the NYSE operator said it was considering joining the fray with German Deutsche Boerse (DE:DB1Gn) to make an offer forLondon Stock Exchange Group PLC (L:LSE).
Marathon Oil (N:MRO) sank close to 6% after announcing a share issue to shore up finances.