Stocks shook off a cautious start to the second quarter on Monday after a report on U.S. manufacturing in March came in better-than-expected and outweighed more bad news from Europe, sending U.S. indexes to fresh multi-year highs.
The Dow Jones industrial average closed at 13,264.49, up 52.45 points or 0.4 per cent, marking its highest close since the end of 2007. The broader S&P 500 closed at 1,418.90, up 10.43 points or 0.7 per cent. In Canada, the S&P/TSX composite index closed at 12,507.06, up 114.88 points or 0.9 per cent.
The U.S. ISM manufacturing index for March rose to 53.4, up from 52.4 in February and topping expectations for a far more modest rise to 53. While that doesn’t point to robust manufacturing activity, it nonetheless remains well above the threshold for expansion.
The good news from the United States seemed to overshadow more glum news from Europe. The unemployment rate there approached a 15-year high of 10.8 per cent last month. While that seemed to weigh on European stocks in early trading, major indexes also rebounded as the day progressed: Germany’s DAX index rose 1.6 per cent.
Commodity producers led the gains in North America, driven in part by rising crude oil and gold prices. Oil rose to $105.23 (U.S.) a barrel, up $2.21. Gold rose to $1,679.70 (U.S.) an ounce, up $7.80. Among key commodity stocks, Suncor Energy Inc. rose 1.9 per cent, Chevron Corp. rose 1 per cent, Barrick Gold Corp. rose 1.2 per cent and Alcoa Inc. rose 1.5 per cent.
Meanwhile, U.S. financials rebounded from an early dip: Bank of America Corp. closed 1.2 per cent higher and JPMorgan Chase & Co. rose 0.3 per cent.
Royal Bank of Canada rose 1.6 per cent during regular trading hours. However, in the afternoon the bank was accused by a U.S. regulator of making banned “wash trades” between 2007 and 2010, exposing the bank to potential penalties.
Avon Products Inc. surged 17.3 per cent after rejecting a $10-billion offer from beauty products company Coty Inc.