Stocks have shown a notable turnaround over the course of morning trading on Wednesday, with the major averages showing a substantial rebound after moving sharply lower earlier in the session. Better than expected economic data contributed to the recovery.
While weak employment data contributed to the initial weakness, stocks bounced back to the upside following the release of reports on manufacturing, construction spending, and pending home sales.
The Institute for Supply Management said that its index of activity in the manufacturing sector edged up to 36.3 in March from 35.8 in February, although a reading below 50 still indicates a contraction in the sector. Economists had been expecting the index to come in at 36.0.
Norbert J. Ore, chair of the ISM Manufacturing Business Survey Committee said, The rapid decline in manufacturing appears to have moderated somewhat, as the PMI remains in the mid-30s for a third consecutive month.
Separately, the Commerce Department said that construction spending fell 0.9 percent in February following a revised 3.5 percent decrease in January. The drop in spending was smaller than the 1.9 decrease expected by economists.
The National Association of Realtors also released a report showing an unexpected increase in pending home sales in the month of February, with the data providing an indication of a silver lining in the much beleaguered housing sector.
NAR said its index of pending home sales rose 2.1 percent to 82.1 in February from a reading of 80.4 in January. The increase by the index came as a surprise to economists, who had expected the reading to come in unchanged compared to the previous month.
Traders are also keeping an eye on London, where global leaders are meeting for the Group of 20 Summit to discuss efforts to deal with the weakness in the global economy.
President Barack Obama is expected to present a raft of proposals, including increased oversight for hedge funds and more powers to deal with troubled financial firms deemed too big to fail.
The major averages have continued higher in the past few minutes, with the Dow and the S&P 500 climbing into positive territory. While the Nasdaq remains down 1.90 at 1,526.69, the Dow is up 23.09 at 7,632.01 and the S&P 500 is up 1.32 at 799.19.
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