US stocks moved higher yesterday after better than expected economic reports fuelled hopes the struggling recovery from recession is gaining traction.
The Dow Jones Industrial Average rose 44.66 points (0.41 per cent) to 10,971.73 at 1540 GMT, extending Thursday's solid gains.
The tech-rich Nasdaq composite climbed 22.94 points (0.95 per cent) to 2,425.52 and the broad-market Standard & Poor's 500 index gained 8.13 points (0.69 per cent) at 1,186.23.
The main indices had opened with lacklustre gains following the long Easter holiday weekend as the market had its first chance to react to Friday's labour report showing the biggest job growth in three years in March. Investors appeared to focus on the bright side of the government's mixed report Friday, when the stock market was closed to mark Good Friday.
The economy created 162,000 jobs in March, after several years of almost nonstop losses, although 48,000 were temporary government hires for census taking, the Labour Department said. The unemployment rate, however, held steady at 9.7 per cent for the third straight month.
"After Friday's labour report provided a modest boost to open today's session, stocks extended gains following a larger-than-expected improvement in the ISM non-manufacturing index, which kept the outlook for continued economic expansion intact," Charles Scwab & Co. analysts said in a client note.
The Institute of Supply Management said its non-manufacturing index rose to 55.4 per cent in March, its third consecutive month of growth. Most analysts had expected the so-called purchasing managers index would register 54 per cent. The report "signals that the expansion is broadening from the goods sector to the rest of the economy, which is necessary for self-sustaining growth," said Aaron Smith at Moody's Economy.com.
There also was good news on the troubled US housing sector, the epicentre of the financial crisis that drove the global economy into the worst recession in decades.
Pending home sales surged 8.2 per cent in February, the National Association of Realtors said.
The strong rise in February, when home sales slumped amid severe winter storms, took most analysts by surprise. The consensus forecast was for the reading to remain unchanged following a revised decline of 7.6 per cent in January.
Among stocks in focus, Apple added 0.55 per cent at $237.27 after announcing it sold more than 300,000 of its new iPads in the US on Saturday, when the touch-screen multimedia device was launched in stores.
Dow heavyweights got a bounce from an increase in crude oil prices to nearly $86 a barrel, the highest level since October 2008. ExxonMobil rose 0.77 per cent to $68.13 and Chevron gained 1.01 per cent at $.47.
In the energy sector, a big acquisition piqued interest. SandRidge Energy, a driller and developer of oil and gas, fell 4.85 per cent to $7.47 announcing an agreed takeover of Arena Resources for $1.6 billion. Arena vaulted 7.03 per cent to $36.67.
Bonds fell back. The yield on the 10-year US Treasury bond rose to 3.992 per cent from 3.859 per cent on Thursday and that on the 30-year bond increased to 4.826 per cent from 4.728 per cent. Bond yields and prices move in opposite directions.