Stocks Open Higher Ahead of Manufacturing Data
01 Juin 2021 - 4:02PM
Dow Jones News
By Joe Wallace
U.S. stock indexes opened higher Tuesday, ahead of manufacturing
data that will give fresh insights into the state of the economic
recovery.
The S&P 500 ticked up 0.7%, following a fourth consecutive
monthly advance for the broad stocks gauge before the Memorial Day
weekend on Friday. The Dow Jones Industrial Average rose 0.8% and
the technology-focused Nasdaq Composite edged up 0.6%.
Investors have grown more confident that rising inflation won't
lead central banks to unwind stimulus measures, pushing major
indexes back toward all-time highs in recent weeks. Data showing a
jump in U.S. inflation had prompted markets to stutter earlier in
May. The S&P 500 closed Friday at its third-highest level in
history.
"The market is relatively sanguine about the inflationary
pressure building," said Brian O'Reilly, head of market strategy
for Mediolanum International Funds. "It is still a liquidity-driven
equity market that is brushing off any bit of bad news," he added,
pointing to President Biden's $6 trillion budget plan as the
potential catalyst for further gains.
Valuations look high and stocks could pull back in the third
quarter, Mr. O'Reilly said. But he doesn't expect a severe selloff,
and said technology is the only sector where he is concerned about
prices being elevated compared with earnings.
Shares of Cloudera jumped 23% before the opening bell in New
York. Private-equity firms KKR & Co. and Clayton Dubilier &
Rice LLC agreed to buy the software company for roughly $5.3
billion in a deal that would take Cloudera private.
AMC Entertainment, a popular stock among individual traders,
jumped 18% premarket. The movie-theater operator said it had sold
new shares valued at $230.5 million to Mudrick Capital Management,
raising cash at a premium to its closing stock price from
Friday.
Other favorites among amateur investors rallied ahead of the
bell, including cannabis company Sundial Growers, which rose 10%.
Videogame retailer GameStop added 5%.
Due at 10 a.m. ET, the Institute for Supply Management's survey
of purchasing managers at U.S. factories is expected to show
activity expanded at a solid clip in May. Manufacturers are
struggling to keep up with demand amid material shortages, high
commodity prices, transportation bottlenecks and hiring
difficulties.
In the bond market, yields on 10-year Treasury notes edged up to
1.633%, from 1.592% Friday. Yields, which rise when bond prices
fall, have waffled around the 1.6% mark since mid-April.
Brent-crude futures, the benchmark in international energy
markets, rose 2.5% to $71.08 a barrel, putting them on track to
close above $70 for the first time since May 2019. Prices have been
bolstered by a decline in global stockpiles of oil that ballooned
in the early stages of the pandemic. The fresh climb in crude
prices boosted shares of Devon Energy, Occidental Petroleum and
other companies in the oil patch ahead of the bell.
Members of the Organization of the Petroleum Exporting Countries
and their allies are due to meet Tuesday to decide whether to press
ahead with a series of monthly production hikes.
The cartel will likely add 350,000 barrels a day of output in
June and 441,000 a day in July, along with an additional boost by
Saudi Arabia, Helima Croft, head of commodity strategy at RBC
Capital Markets, wrote in a note. Saudi is cautious about quickly
bringing back production, given the high coronavirus counts in
India and Japan and the potential for a rise in Iranian oil exports
later this year, she said.
In overseas markets, the Stoxx Europe 600 rose 1.2%, putting the
pan-continental stocks gauge on track to close at a record.
In Asia, the Shanghai Composite Index rose nearly 0.3% by the
close, and Japan's Nikkei 225 ticked down 0.2%.
Write to Joe Wallace at Joe.Wallace@wsj.com
(END) Dow Jones Newswires
June 01, 2021 09:47 ET (13:47 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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