US stocks rally on surprisingly good services sector data

NEW YORK (AFP) – Wall Street stocks finished solidly higher on Wednesday (Aug 3), bouncing after two down sessions following better-than-expected services industry data and mostly good earnings.

A report from the Institute for Supply Management showed surprising strength in the massive US services sector, thanks to a jump in business activity and new orders even as some companies expressed recession fears.

A note from Oxford Economics described the ISM data as “encouraging,” but pointed to lingering questions about the direction of the economy.

“The recovery’s best days are clearly in the rearview mirror, but this doesn’t mean a downturn has begun,” Oxford said.

“We think fundamentals are strong enough to prevent a recession this year, though the window to achieving a softish landing is narrowing.”

Analysts also pointed to a sharp drop in oil prices that is expected to translate into lower gasoline prices, providing relief to consumers.

The Dow Jones Industrial Average finished up 1.3 per cent at 32,812.50.

The broad-based S&P 500 advanced 1.6 per cent to 4,155.17, while the tech-rich Nasdaq Composite Index jumped 2.6 per cent to 12,668.16.

Among individual companies, Starbucks gained 4.3 per cent as it reported record quarterly revenues on strong sales in North America that offset the drag from China Covid-19 restrictions.

Moderna surged 16 per cent as the vaccine maker reported better-than-expected quarterly results and announced a new US$3 billion (S$4 billion) share repurchase plan.

Advanced Micro Devices fell 1.2 percent despite beating analyst expectations. Analysts pointed to disappointment with the company’s third-quarter projections.