US stocks bounce back at open as composite PMI data edges higher driven by services growth

10.15am: Buoyant start for stocks

US blue-chips opened higher on Friday, recovering a chunk of the previous session’s triple-digit drop as US businesses reported their fastest growth for almost six years.

After three-quarters of an hour of trading, the Dow Jones Industrials Average was up 89.47 points or 0.3% at 31,582.8, while the tech-laden Nasdaq Composite – which also saw a triple-digit fall on Thursday – gained 0.4%, and the broader S&P 500 index took on 0.2%.

The gains came after Markit’s flash US composite PMI output index reading rose to 58.8 for February, up from 58.7 in January. The services business activity came in at 58.9, up from 58.3 last month, while the manufacturing PMI eased to 58.5 from 59.2 in January.

“The data add to signs that the economy is enjoying a strong opening quarter to 2021, buoyed by additional stimulus and the partial reopening of the economy as virus-related restrictions were eased on average across the country,” said Chris Williamson, chief business economist at IHS Markit, which compiles the survey.

“Business sentiment remains buoyant, boosted by hopes of further stimulus and the vaccine roll-out, but it’s disappointing to see this not yet translate into stronger jobs growth.”

Bitcoin continued its rally and is nearing a market capitalisation of US$1 trillion. The cryptocurrency rose 2.6% to an all-time high of US$52,932, representing a 60% surge since the start of February.

It is growing in popularity helped by endorsement from Elon Musk’s Tesla which bought US$1.5bn and announced it will accept it as a payment.

Mastercard and Bank of New York Mellon are looking to support certain cryptocurrencies, while Morgan Stanley may add Bitcoin to its possible bets. The latest institutional support came from Jeffrey Gundlach, founder and chief executive of DoubleLine Capital.

7.50am: Small gains expected at end of week

US stocks are expected to open modestly higher on Friday, steadying after big falls on Thursday as traders await a batch of US economic data.

The Dow Jones Industrials Average, the S&P 500 and the Nasdaq Composite are called to add a handful of points in early trading, with the Dow and Nasdaq both having notched up triple-digit losses in the previous session.

Traders are still digesting the GameStop Congressional hearing while awaiting the latest Markit flash US PMI readings for both the manufacturing and services sectors.

Later on Friday, US climate change envoy John Kerry is scheduled to formally get back to the Paris agreement after the Trump administration withdrew from it.

Looking at commodities, the oil price fell below US$60 per barrel as wells are recommencing activity in Texas after cold-weather disruption, not helped by Iraq boosting its crude oil exports despite pledging to restrain production.

Conversely, Bitcoin hit the US$52,000 mark after Tesla CEO Elon Musk called it a “less dumb” version of cash while defending the electric car maker’s US$1.5bn investment in the cryptocurrency.

Six things to watch on Friday:

The UK’s top court has ruled that a group of former drivers for Uber Technologies Inc. were entitled to a minimum wage and other benefits while working for the company, dealing a setback to Uber and other gig-economy firms in world-wide battles over their employment model.

HSBC Holdings PLC does not need to hand over banking documents requested by Huawei Technologies Co. Chief Financial Officer Meng Wanzhou as part of her effort to resist a US extradition order, a judge in London’s High Court said Friday.

International Business Machines Corp. is exploring a potential sale of its IBM Watson Health business, according to the Wall Street Journal which cited people familiar with the matter, as the technology giant’s new chief executive moves to streamline the company and become more competitive in cloud computing.

Applied Materials Inc rose after it forecast second-quarter revenue above market expectations, as demand for its semiconductor manufacturing tools picked up during a global shortage of semiconductors.

Roku Inc gained after the video-streaming device maker reported quarterly revenue above market expectations, thanks to an influx of cord-cutting subscribers dropping their cable packages for streaming services.

Robinhood Markets Inc. chief executive officer, Vlad Tenev offered an apology for the company’s decision to temporarily curb trading in some stocks, including GameStop Corp. , on January 28 amid extraordinary volatility. His apology came after House Financial Services Committee Chairwoman Maxine Waters interrupted the Robinhood CEO during his opening remarks to US lawmakers.

Story by ProactiveInvestors