Energy, Health-Care Give Stocks Late-Session Boost

U.S. equity markets glided higher Monday morning as global economic data took center stage and health-care shares jumped

The Dow Jones Industrial Average was 164 points higher, or 0.93% to 17828. The S&P 500 rose 24 points, or 1.18% to 2103, while the Nasdaq Composite tacked on 73 points, or 1.45% to 5127.

All ten S&P 500 sectors ended in the green as energy, health care and financials led the way higher.

Today’s Markets

The health-care sector jumped on Monday as the Nasdaq Biotechnology Index rallied nearly 4% on the session. The action helped propel the Dow and the S&P 500 highest levels since July and August respectively.

AbbVie (NYSE:ABBV)was the biggest gainer in the health-care sector after Credit Suisse on Sunday raised its price target on the stock from $78 from $77 citing the company’s strong third-quarter results, higher full-year guidance, and “bullish expectations around their flagship Humira franchise.” The company’s shares jumped more than 6%.

Cardinal Health (NYSE:CAH), Tenet (NYSE:THC), Pfizer (NYSE:PFE), and Celegne (NASDAQ:CELG) rounded out the top five gainers.

Global manufacturing data, meanwhile, grabbed investor focus after a slew of global reports.

The latest read on the manufacturing sector from the Institute for Supply Management showed factory activity hit its lowest level since May 2013, and the fourth-straight month of decline. The gauge slid to 50.1 in October from 50.2 the month prior. Wall Street had anticipated a steeper decline to 50. Readings above 50 indicate expansion, while those below point to contraction.

Economists at Barclays said while the data indicate a more stable manufacturing sector, they see headwinds from a strong dollar and weak foreign demand likely to prevent a “robust rebound.”

“In contrast to some regional manufacturing surveys, portions of aggregate national activity rebounded modestly over the month. New orders rose to the highest level since July, and production reversed its September deceleration. Employment on the other hand, fell sharply to 47.6, in an indication of continued headwinds facing goods-sector employment growth,” a note from Barclays read.

Investors treaded lightly in the early-morning hours after China released PMI figures that unexpectedly showed the nation’s manufacturing sector contracted for a third-straight month.

“The release of the Chinese manufacturing PMI figures over the weekend show continued contraction remains, providing further evidence that the Chinese slowdown continues to roll on, despite the decline easing somewhat,” Joshua Mahony, IG market analyst, said.

He continued by saying the data wasn’t all bad as the private Caixin report rose by the most in 15 months despite its roots in contraction territory.

Meanwhile, financial-information services provider Markit reported a slight increase in eurozone manufacturing growth – its gauge rose to 52.3 in October from 52 during the month prior. Markit said the growth last month came largely from companies cutting prices in an effort to attract more buyers. A bright spot in the report was the UK manufacturing figures, which jumped to 55.5 and beat expectations.

“The huge outperformance of the UK manufacturing PMI gives yet another nod to Mark Carney that the UK economy is booming, despite a weaker-than-expected Q3 GDP figure last week, “Mahony said. “The 16-month high of 55.5 smashed estimates and was among the biggest monthly gains seen since the inception of the survey 24 years ago.”

While markets in Asia finished lower, European markets were mostly higher after having had time to digest the data. The Euro Stoxx 50, which tracks large-cap companies in the eurozone, rose 0.48%, while the German Dax was up 0.93%, the French CAC 40 gained 0.38%, and the UK’s FTSE 100 ticked up 0.01%.

Manufacturing data rounded out the day’s economic reports, but the weekly calendar was set with a number of key data points. Traders looked ahead to Tuesday’s October auto sales, Wednesday’s service-sector growth report from ISM, and Friday’s all-important October jobs report.

“Consensus for Friday is at 182,000 versus 142,000 prior, but I am hearing whispers with a 200 handle now, and there is a good chance that September gets revised higher too,” Michael Block, chief strategist at Rhino Trading Partners said in a note. “So there is a ton of optimism going into Friday, and that may hawk everyone up further.”

After the FOMC’s policy decision last week, Fed speakers will be on parade this week. The highlight of the week will be Chair Janet Yellen, who is set to give testimony on bank regulation in front of a House committee on Wednesday. San Francisco Fed President John Williams was set to speak on Monday.

The yield on the benchmark 10-year U.S. Treasury bond rose 0.025 percentage point to 2.176% in recent action.

Elsewhere in the market, global oil prices saw steep declines on the back of the weak Chinese economic data that sparked concerns about slowing demand in the region. Iran also said it was preparing to tell OPEC it will raise crude production at its December 4 meeting. U.S. crude dipped 0.97% to $46.14 a barrel. Brent crude, the international benchmark, declined 1.55% to $48.79 a barrel.

Metals were also lower as gold declined 0.50% to $1,135 a troy ounce, and silver shed 0.98% to $15.42 an ounce. Copper slid 0.09% to $2.32 a pound.