Stocks saw substantial gains to open the traditionally downward trending month of September on Wednesday, as data showing a pickup in manufacturing activity in both the U.S. and China recharged some hopes of a continued economic recovery. The rally was further fueled by a better than expected reading on resource-linked Australian GDP.
The major averages saw further upside in late-session dealing, ending near their best levels of the day. The Dow shot up by 254.75 points or 2.5 percent to 10,269.47, the Nasdaq surged by 62.81 points or 3 percent to 2,176.84 and the S&P 500 advanced by 30.96 points or 3 percent to 1,080.29.
On the economic front, the Institute for Supply Management reported that its index of U.S. manufacturing activity rose to 56.3 in August from 55.5 in July, surprising economists who had expected the index to dip to 52.9.
Market sentiment was already upbeat ahead of the report, as data from Markit Economics showed that Chinese manufacturing activity expanded after a two-month contraction. The headline index came in at 51.9, up from 49.4 in July.
Early optimism was also generated by a report from the Australian Bureau of Statistics showing that Australian GDP rose by 1.2 percent in the second quarter compared to the 0.7 percent growth seen in the previous quarter. Economists had expected the economy to grow by 0.9 percent.
Meanwhile, the day's second-tier economic data from the U.S. saw little reaction. The Commerce Department said that construction spending fell by 1.0 percent in July, which was steeper than expected.
In news on the labor market, Automatic Data Processing, Inc. (ADP) reported that private sector employment fell by 10,000 jobs in August, while economists had forecast an increase of 13,000 jobs.
Commenting on the data in an interview with RTT News, Lou Brien, market strategist at DRW Trading, said that he's going to be bearish on the stock market that until jobs return.
"At some point, you've got to stop firing the consumer and hire them back," Brien said. "It really does come down to jobs."
Also today, General Motors Co. and Ford Motor Co. (F) both reported drops in their U.S. vehicle sales for August compared to the same month last year, when sales were boosted by the U.S. government's "Cash for Clunkers" incentive program.
GM reported a 25 percent drop in U.S. vehicle sales for August, while Ford reported an 11 percent decline.
Sector News
Healthcare provider stocks were among the strongest percentage gainers on the day, driving the Morgan Stanley Healthcare Provider Index up by 6.3 percent. With the gain, the index bounced well off the one-year closing low it set on Tuesday.
The healthcare sector was helped by a 66 percent surge by shares of Sunrise Senior Living Inc. (SRZ), which rallied after the company said it will receive $50 million in cash as part of a settlement and restructuring agreement with HCP, Inc. (HCP).
Steel stocks also turned in strong performances, with the NYSE Arca Steel Index rising by 5.4 percent to a two-week closing high.
Sharp gains were also recorded by oil service, railroad, electronic storage and banking stocks along with many other sectors, while gold stocks ended the day notably weaker.
The NYSE Arca Gold Bugs Index fell by 1.3 percent, as the price of gold fell by $2.20 to $1,248.10 an ounce on the day.
Dow Components
Bank of America (BAC) was the leading percentage gainer in the Dow, climbing by 6.1 percent and seeing a further recovery from Monday's thirteen-month closing low.
Caterpillar (CAT), JP Morgan Chase (JPM), General Electric (GE) and Chevron (CVX) were among the other leading gainers in the Dow, rising by at least 3.6 percent each.
Despite posting a more modest gain than its counterparts, McDonald's (MCD) finished at a fresh historic high of $74.54 after rising by 2 percent on the day.
Procter & Gamble (PG) was the thinnest percentage gainer in the blue chip index, edging up by 0.2 percent and inching up further from a two-month closing low set earlier this week.
Other Markets
Overseas, stock markets in the Asia-Pacific region saw a partial rebound from Tuesday's sell-off. Japan's benchmark Nikkei 225 Index gained 1.2 percent, while Hong Kong's Hang Seng Index rose by 0.4 percent.
The major European markets also saw a notable rally. The French CAC 40 Index shot up by 3.8 percent while the German DAX Index and the U.K.'s FTSE 100 Index both jumped by 2.7 percent.
In the bond markets, treasuries saw significant weakness amid the rally on Wall Street. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, closed at 2.582 percent, posting a gain of 10.5 basis points.
Looking Ahead
Thursday, market focus is likely to be on data on jobless claims, factory orders and pending home sales.
Meanwhile, any economic commentary offered by Federal Reserve Chairman Ben Bernanke before the Financial Crisis Inquiry Commission will likely receive extra attention.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.