US stocks rallied on Tuesday and the Dow hit its highest level since December 2007 after data showed the US manufacturing sector expanded at a faster pace than expected in April, easing jitters about a slowdown in the economic recovery.
With most markets in Europe and several major Asian markets closed for the May Day holiday, investors shifted their attention to US economic data.
Data from the Institute for Supply Management showed growth in US manufacturing came in at its strongest rate in 10 months in April, suggesting the economy remains resilient after indications it had lost momentum at the start of the second quarter.
“‘Sell in May’ is a valuable seasonal strategy when confirmed by our indicators. However, weakness in the measures we monitor, although growing, has not progressed to the point that they support a bearish outlook as they did in May 2011,” said Ari Wald of Brown Brothers Harriman.
“For now we believe a balanced approach is most appropriate due to the lack of full confirmation in either direction.”
The Dow Jones industrial average was up 113.18 points, or 0.86 per cent, at 13,326.81. The Standard & Poor’s 500 Index was up 15.93 points, or 1.14 per cent, at 1,413.84.
The Nasdaq Composite Index was up 34.12 points, or 1.12 per cent, at 3,080.48.
The Dow earlier rose to as high as 13,338.66 points.
The SP 500 in April posted its first monthly decline since November as economic data pointed to a slowing domestic economy and continued flare-ups in the euro zone highlighted the risks of the regions debt crisis.
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