* Banks climb as U.S. yields hit 1-week high
* Chipmakers rise on positive China data
* Lyft drops below IPO price on second day of trading
* Indexes up: Dow 1.27 pct, S&P 1.16 pct, Nasdaq 1.29 pct (Updates to market close)
NEW YORK, April 1 (Reuters) – U.S. stocks rallied on Monday, starting off the second quarter on a strong note, as upbeat manufacturing numbers from China and the United States eased worries about slowing global growth.
The benchmark S&P 500 index, which is only 2.2 percent below its record closing high in September, triggered a “golden cross” pattern, in which its 50-day moving average crosses above its 200-day moving average. Many believe the technical signal could portend more gains for stocks in the short term.
Gains in global equities were spurred by data showing that China’s manufacturing sector unexpectedly returned to growth in March for the first time in four months.
“The Chinese numbers bounced back, and people are taking more risk today because of it,” said Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.
U.S. manufacturing numbers for March were also better than expected, helping investors overlook soft retail sales data for February.
The Dow Jones Industrial Average rose 329.74 points, or 1.27 percent, to 26,258.42, the S&P 500 gained 32.79 points, or 1.16 percent, to 2,867.19, and the Nasdaq Composite added 99.59 points, or 1.29 percent, to 7,828.91.
Concerns about a global economic slowdown have dimmed sentiment since the Federal Reserve announced in late January that its monetary tightening would end earlier than expected, as it cited “cross currents” affecting the economy. The shift in Fed policy drove yields on 10-year Treasury notes below those of three-month bills last week for the first time in more than a decade.
Yields on 10-year notes have since risen back above three-month bill rates and on Monday hit a one-week high. Monday’s rise in the 10-year Treasury yield helped lift financial shares, which provided the biggest boost to the S&P 500 among the index’s 11 sectors. S&P 500 bank shares jumped 2.9 percent.
“Treasury yields had priced in a gloomy outlook, and now they’re unwinding some of that negativity,” said Keith Lerner, chief market strategist at SunTrust Advisory Services in Atlanta. “So we’re seeing money moving back into cyclical areas, which is why financials are big leaders today.”
Concerns about slowing momentum have not entirely dissipated. With the first-quarter corporate earnings reporting season about two weeks away, investors are bracing for what may be the first U.S. profit decline since 2016. Analysts expect quarterly earnings to fall 2 percent, according to Refinitiv data.
Still, on Monday, most S&P sectors rose. Only consumer staples, real estate and utilities shares, which tend to decline as 10-year Treasury yields rise, were in the red.
Auto shares rose after China’s State Council said on Sunday that the country would continue to suspend additional tariffs on import of U.S. vehicles and auto parts after April 1.
General Motors Co shares added 1.8 percent and Ford Motor Co shares gained 2.3 percent.
Chipmakers, which draw much of their revenue from China, also rose. The Philadelphia Semiconductor index advanced 2.5 percent.
Shares of Wynn Resorts Ltd jumped 8.4 percent, the most among S&P 500 companies, as March gambling revenue from the Chinese territory of Macau rose from the previous month.
Lyft Inc shares tumbled 11.9 percent to end below their IPO price after brokerage Guggenheim Securities started coverage of the ride-hailing company’s shares with a “neutral” rating. Lyft debuted on the Nasdaq on Friday.
Advancing issues outnumbered declining ones on the NYSE by a 2.99-to-1 ratio; on Nasdaq, a 2.11-to-1 ratio favored advancers.
The S&P 500 posted 63 new 52-week highs and no new lows; the Nasdaq Composite recorded 68 new highs and 28 new lows.
Volume on U.S. exchanges was 7.11 billion shares, compared to the 7.47 billion average over the last 20 trading days.
U.S. stocks and bond yields ripped higher Monday after upbeat Chinese manufacturing data offered investors a sign that the world’s second-largest economy was possibly stabilizing.
Stocks world-wide kicked off the second quarter with gains after an official gauge of manufacturing activity in China jumped in March, rebounding after hitting its lowest point in three years in February.
World stocks rise on improved Chinese manufacturing data
Stocks around the world rose Monday on encouraging manufacturing data out of China that suggested government stimulus there may be gaining traction.
European shares were up in midday trading despite bad economic reports there, with Germany’s DAX gaining 1 percent to 11,645. The CAC40 in France advanced 0.5 percent to 5,378 and Britain’s FTSE 100 rose 0.6 percent to 7,324.
Wall Street looked to extend gains from last week, with the future contract for the Dow Jones Industrial Average up 0.6 percent to 26,095. The S&P 500 future also gained 0.6 percent, to 2,855.
China’s statistics bureau and an industry group said Sunday their monthly purchasing managers’ index rose to 50.5 on a 100-point scale on which numbers above 50 show activity increasing. That was up 1.3 points from February.
Sub-indexes for exports, employment and new orders all improved, and an index showing companies’ expectations for future new business rose 0.6 points to 56.8.
“There is a lot of optimism and feelings of joy among investors today,” Naeem Aslam of Thinkmarkets.com said in a commentary, “thanks to the Chinese economic data which has painted a very optimistic picture.”
Things looked less rosy in Europe, where a report showed that inflation fell further away from the European Central Bank’s target of 2 percent, a potential sign of economic weakness. Another closely monitored survey showed the manufacturing sector shrinking at its fastest rate in six years. The developments suggest Europe is struggling to cope with global trade tensions and the uncertainty of Brexit, among other things.
In Asia, Japan’s Nikkei 225 index added 1.4 percent to 21,509.03, easing off earlier highs after economic data showed conditions for manufacturers deteriorating. The Shanghai Composite index jumped 2.6 percent to 3,170.36 and Hong Kong’s Hang Seng added 1.7 percent to 29,554.74.
The Bank of Japan reported Monday that a survey of major manufacturers showed business sentiment worsening in March compared with three months earlier.
Adding to economic gloom in Japan, the Nikkei Japan purchasing manager’s index showed output in manufacturing falling at its fastest rate in nearly three years in March due to weak demand both at home and abroad.
“The economic backdrop for the manufacturing sector in Japan remains fiercely challenging,” Joe Hayes, an economist at IHS Markit, which compiles the survey, said in a commentary. “Asian goods producers face headwinds from slowing growth in Europe and China, while global trade risks are yet to be mitigated by a breakthrough in U.S.-China relations.”
Investors are hoping for progress in U.S.-Chinese trade talks that are due to resume in Washington after a round in Beijing last week that U.S. Treasury Secretary Steven Mnuchin described as “constructive.”
Officials from the world’s two biggest economies are aiming to put to rest a dispute over technology and other issues. Chinese Vice Premier Liu He is expected to travel to Washington next week.
Investors also will be focusing more on corporate earnings in coming weeks, as the next big wave of company results kicks into gear in mid-April.
Elsewhere, South Korea’s Kospi climbed 1.3 percent to 2,168.28 and the S&P ASX 200 rose 0.6 percent in Australia to 6,217.00. India’s Sensex gained 0.8 percent to 38,981.69 and shares also rose in Taiwan, Singapore and Thailand. Indonesia’s benchmark fell.
ENERGY: Benchmark U.S. crude picked up 58 cents to $60.72 per barrel in electronic trading on the New York Mercantile Exchange. It rose 1.4 percent to settle at $60.14 a barrel on Friday. Brent crude, used to price international oils, advanced 99 cents to $68.57 per barrel.
CURRENCIES: The dollar rose to 110.98 Japanese yen from 110.85 yen on Friday. The euro strengthened to $1.1232 from $1.1219.