Wall St up overnight as US manufacturing lifts

Specialists James Ahrens, left, and Robert Tuccillo work on the floor of the New York Stock Exchange. The success of a Greek debt swap overnight has pushed Wall St up. File photo / AP

Better-than-expected manufacturing data from the world's two largest economies helped underpin stocks on Wall Street and in Europe.

The US Institute for Supply Management's index of national factory activity rose to 53.4 in March, surpassing expectations, while China's Purchasing Managers' Index climbed to the highest level in 11 months, rising to 53.1 last month.

In early afternoon trading in New York, the Dow Jones Industrial Average rose 0.61 per cent, the Standard & Poor's 500 Index advanced 0.90 per cent and the Nasdaq Composite Index gained 0.93 per cent.

"The market is telling you it believes the [US] economy has turned around, it has made that corner, it is clearly moving higher-especially compared to Europe and parts of Asia," Ken Polcari, managing director of ICAP Equities in New York, told Reuters.

Investors chose to focus on the positive data.

Another report showed that US construction spending dropped 1.1 per cent in February to an annual rate of US$808.86 billion, the lowest level since October, according to the Commerce Department. Spending in January was revised to a 0.8 per cent decline, from the previously reported drop of 0.1 per cent.

Barclays slashed its forecast for economic growth in the first quarter of 2012 to 2.0 per cent from 2.4 per cent, while Goldman Sachs lowered its outlook to 2.1 per cent from 2.3 per cent, according to Reuters.

In Europe, the Stoxx 600 Index climbed 1.5 per cent for the day.

Unfortunately the data from Europe wasn't all that bright.

Unemployment in the euro zone rose to 10.8 per cent in February, the highest since June 1997, according to Eurostat. That was in line with expectations of economists polled by Reuters.

It might get worse before it gets better.

"We expect it to go higher, to reach 11 per cent by the end of the year," Raphael Brun-Aguerre, an economist at JP Morgan in London, told Reuters. "You have public sector job cuts, income going down, weak consumption. The economic growth outlook is negative and is going to worsen unemployment."

A separate report showed that manufacturing activity in the euro zone contracted for an eighth successive month in March.