The stock markets in the United States climbed slightly due to the stronger-than-expected manufacturing data, a sign that the industry is recovering from a slump early this year.
The Dow Jones Industrial Average (DJIA) increased 0.1% to 17,789.67 points and the S&P 500 went up 0.11% to 2,099.33 points. The NASDAQ rose 0.8% to 4,595.25 points and the Russell 2000 climbed 0.71% to 1,163.04 points.
In a telephone interview with Bloomberg, Chuck Self, the chief investment officer at iSectors LLC, said “people are looking for reasons to take profits and not to try to play the market” based on the current market level. He added, “If the May numbers are not that strong, it not only affects the Fed, but it also affects how people look at the second quarter.”
U.S. manufacturing grew faster than expected
The Institute for Supply Management (ISM) reported that the manufacturing sector in the United States expanded 0.5% to 50.8% in May. Economists polled by Bloomberg expected 50.3%. A reading above 50% indicates that the manufacturing economy is growing.
Bradley Holcomb, chairman of the ISM factory survey commented, “Things for me are pointing in the right direction. He noted the existence of an “inventory shortage” and “suppliers are now having a harder time catching up so they’re slower” as businesses reduced stockpiles and increased orders.
The index of supplier deliveries went up to 54.1%, the highest level since December 2014 while the index of factory inventories declined to 45%.
Market struggles to absorb economic data
Last month, investors were surprised when the Federal Reserve indicated the possibility of raising interest rates. They will focus their attention on other economic data that will be released this week.
Jonathan Corpina, a senior managing partner at Meridian Equity Partners, said, “There’s an abundance of economic data this week that investors are confused on how to digest.”
Bryce Doty, a senior portfolio manager at Sit Investment Associates shared a similar view that the “market is struggling with how to absorb” some of the details of the manufacturing data and they are also looking forward on the upcoming jobs report.
Market movers
The stock price of Edge Therapeutics (NASDAQ:EDGE) surged more than 19% to $9.89 per share. The company is among the biggest gainers on NASDAQ. Credit Suisse recently maintained an Outperform rating with a price target of $18 per share.
Michael Kors Holdings (NYSE:KORS) gained more than 6% to $45.54 per share. The company reported impressive financial performance for the fourth quarter ended April 2, 2016. Its earnings were $0.98 per diluted share and its revenue increased 10.9% to $12 billion.
The shares of Demandware (NYSE:DWRE) soared more than 55% to $74.78 per share. The company agreed to sell itself to Salesforce.com (NYSE:CRM) for $2.8 billion.
