NEW YORK |
NEW YORK (Reuters) – Stocks rose on Tuesday, led by recently beaten down financial shares, after data showed the economy’s services sector grew slightly faster than expected in May.
The pace of growth in the services sector picked up in May as a gauge of new orders improved, according to an industry report released on Tuesday. The Institute for Supply Management’s services index edged up to 53.7 from 53.5 in April, a touch above economists’ forecasts for it to hold steady.
“The (equities) market is very fearful of the economic data. Even if it was in line with expectations there’s a sigh of relief from many that it wasn’t worse,” said Peter Boockvar, equity strategist at Miller Tabak & Co in New York.
“Europe’s obviously a concern, but we’ve been selling off for weeks on that. A slightly better than expected services number, which makes up the majority of the economy, is a sigh of relief in the face of a lot of bearishness.”
Traders struggled, however, to interpret statements on the outcome of emergency talks among the Group of Seven industrialized nations as they tackle a deepening euro zone crisis. The Treasury Department said G7 finance ministers “reviewed developments in the global economy and financial markets and the policy response under consideration.”
Japan’s Finance Minister said he told G7 members that Japan is confident in Europe’s response to its problems.
The Dow Jones industrial average .DJI rose 32.70 points, or 0.27 percent, to 12,134.16. The S&P 500 Index .SPX gained 6.83 points, or 0.53 percent, to 1,285.01. The Nasdaq Composite .IXIC added 17.47 points, or 0.63 percent, to 2,777.48.
In the euro zone, most major economies are now in various states of decline, according to business surveys that suggested even Germany is no longer immune to the crisis.
The S&P 500 was flat for the day on Monday, after a steep decline last week, as investors weighed low prices against the backdrop of Europe struggling with debt and stalling economies.
“Valuations are extremely attractive, dividend yields compared to Treasuries are at (multi-year) highs, but the global macro overhang can certainly create another down step in the short term,” said Oliver Pursche, president at Gary Goldberg Financial Services in Suffern, New York.
The S&P financial sector .GSPF rose 1.5 percent to lead gains. The sector is down more than 12 percent since the start of May.
Dollar General Corp (DG.N) shares dropped 2.7 percent to $47.19 after the company said key shareholders plan to sell up to 25 million shares.
(Reporting by Rodrigo Campos; Editing by Padraic Cassidy)