U.S. markets and stock exchange traded funds climbed Tuesday after the latest manufacturing data revealed that the economy is quickly bouncing back.
ISM data showed U.S. factory activity strengthened for the third consecutive month to a 56.0 in August, its highest reading since January 2019, Reuters reports. The strong U.S. figures also follow encouraging manufacturing data out of China and Europe earlier in the day, adding to optimism over a global economic recovery.
“The continuation of this recovery is being priced in already,” Esty Dwek, head of global market strategy at Natixis Investment Managers, told the Wall Street Journal. “As long as it keeps going, I think markets can continue advancing.”
Germany, Europe’s industrial center, also recorded a stronger-than-expected recovery in activity as the purchasing manager’s index increased to its highest level in almost two years.
Additionally, a gauge of China’s manufacturing activity for last month hit its highest level in almost a decade due to strong domestic and external demand, along with faster production activity. It was the fourth consecutive month that the Caixin China purchasing managers index remained above the 50 level.
However, the positive news was slightly dampened by the slow growth in employment numbers, adding to fears that the labor market recovery was losing momentum. Looking ahead, investors will be watching closely for the monthly U.S. jobs report on Friday.
As U.S. stock indices recorded their fifth straight monthly gain on Monday, technology-focused stocks continue to take the lead.
“There are limited options where you can buy growth because the country is slowly reopening and tech does the best in the slow-growth economy,” Thomas Hayes, managing member at Great Hill Capital LLC, told Reuters.
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