The US stocks rose Monday on the back of strong manufacturing data, lifting Dow Jones Industrial Average to the highest level since 2007.
The Dow rose 52.45 points, or 0.4 percent, to close at 13,264.49. The S&P 500 closed with a gain of 0.43 points, or 0.7 percent, at 1,418.90, which is the highest close since June 10, 2008. All the ten groups in S&P 500 Index made gains. The Nasdaq composite average rose 28.13 points, or 0.9 percent, to 3,119.70.
The gains were largely triggered by data that showed the US manufacturing sector expanded at a faster pace than what analysts had forecast. The Institute for Supply Management's index of the US factory activity rose to 53.4 in March from February's 52.4. With orders, production and employment rising, the report gave strong indication that the US economy was improving.
The rise in the ISM manufacturing index in March leaves it consistent with annualised GDP growth of around 2.5%, which is in line with our estimate for the first quarter, Capital Economics said in a note.
The manufacturing gains may not represent a boom, IHS analyst Nigel Gault said, adding that the data however point to a broad-based manufacturing expansion, with fifteen of eighteen industries reporting growth.
At the same time, economy data from the Eurozone were not great. According to Markit's Eurozone Manufacturing Purchasing Managers' Index, the manufacturing sector continued to shrink for a straight eighth month in the euro area.
Adding to the economic woes, Europe's statistics bureau has reported that unemployment has climbed to 10.8 percent in the 17 countries that use the euro. The US jobs data will be released later this week.
The sustained recovery in the US economy, the world's biggest oil consumer, is certain to have an impact on oil. On Monday, the country's oil demand in January was revised higher by 169,000 barrels per day by the Energy Information Administration.
It is hoped that these positive signs from the US will outshine the concerns of decreasing demand for oil in Europe and Japan. The expectation is that markets will remain stable for the rest of the week ahead of the long Good Friday weekend.