Major market indices soar on positive economic data in the U.S and abroad. The Dow (DJI) added 254.75 points, or 2.54 percent, to close the session at 10,269.47. The S&P 500 (SPX) gained 30.96 points, or 2.95 percent, to 1,080.29 with the Nasdaq (COMP) tacking on 62.81 points, or 2.97 percent, to 2,176.84. Volume was moderate on the session with the NYSE trading 1.20 billion shares and the Naz turning over 2.15 billion shares. Market breadth was positive by a 27-to-4 and 22-to-5 margin on the Big Board and Naz respectively.

Economic news out China got things off to a good start Wednesday, which was followed up by better than expected data in the U.S. Chinese manufacturing activity in August rose slightly, ending a three-month slide. In the U.S. the ISM Mfg. Survey was also higher, rising to 56.3 in August, easily surpassing expectations for a figure of 53.0. A reading above 50 is considered expansionary and this index has been above this key level since July 2009. The employment component of the index moved above 60, showing strength in job creation in the manufacturing sector. 

Speaking of employment, the Challenger report showed that just 34,768 job announcements were made in August. This is down from 41,676 in July and less than half the figure from a year ago. However, a slowdown in job cuts isn’t leading to hiring with the ADP Employment data showing a loss of 10,000 private payrolls during the month. 

Thanks to strength in manufacturing across the globe, materials stocks rallied Wednesday. Shares of BHP Billiton (BHP) gained 5.47 percent with Cliff’s Natural Resources (CLF) up 6.14 percent. Shares of Caterpillar (CAT) gained 4.6 percent, the second largest gain of any Dow stocks, trailing only a 6.0 percent gain in shares of Bank of America (BAC). Financial stocks across the board saw gains with the Financial Select Sector SPDRs (XLF) up 3.89 percent to $14.08. 

Though there was a lack of merger announcements Wednesday, merger rumors continued to be a focus. General Electric (GE) stated that it has plans to acquire businesses in the next two to three years and could spend up to $30 billion doing so. This news helped push GE shares above $15 while gaining 3.66 percent on the session. 

Thursday’s calendar will include data on jobless claims, pending home sales and productivity and costs. All of these could impact trading, so it will be interesting to see if stocks can sustain Wednesday’s gains or if traders will play it safe ahead of Friday’s employment report. 

Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site