October 2, 2017 / 7:21 PM / in 17 days

US STOCKS-Wall Street starts quarter higher; data signals strength

* Casino stocks dip, gun makers rise after Las Vegas mass shooting

* U.S. factory activity surge to a more than 13-year high in Sept

* Indexes up: Dow 0.6 pct, S&P 0.3 pct, Nasdaq 0.2 pct (Updates to late afternoon)

By Caroline Valetkevitch

NEW YORK, Oct 2 (Reuters) - U.S. stocks started the fourth quarter on a strong note on Monday, with all three major indexes touching record highs as data pointed to underlying strength in the economy.

A measure of U.S. manufacturing activity surged to a near 13-1/2-year high in September as disruptions to the supply chains caused by hurricanes Harvey and Irma resulted in factories taking longer to deliver goods and boosted raw material prices.

The dollar extended gains after the data. The currency has been rising after Fed Chair Janet Yellen’s recent speech that suggested the chances of an interest rate hike in December remain high.

Investors have also pinned hopes on President Donald Trump’s tax reform plan, which envisages lowering corporate tax to 20 percent.

“Today is a continuation of potential enthusiasm on the tax front and the data this morning. That was a good manufacturing number,” said Scott Wren, senior global equity strategist at Wells Fargo Investment Institute in St. Louis, Missouri.

The day’s biggest gains were in financial and materials shares.

The Dow Jones Industrial Average rose 141.39 points, or 0.63 percent, to 22,546.48, the S&P 500 gained 8.39 points, or 0.33 percent, to 2,527.75 and the Nasdaq Composite added 15.82 points, or 0.24 percent, to 6,511.78.

Shares of casino operators were lower, while those of gun makers moved higher after a gunman killed at least 58 people and wounded more than 500 more in Las Vegas on Sunday in the deadliest mass shooting in U.S. history.

The energy sector was down 0.2 percent. A rise in U.S. drilling and higher OPEC output put brakes on a rally that helped oil prices register their biggest third-quarter gain in 13 years.

General Motors was up 4.5 percent and hit a record high after brokerage Deutsche Bank said the carmaker could launch driverless cars on a large scale in 2020.

Advancing issues outnumbered declining ones on the NYSE by a 1.71-to-1 ratio; on Nasdaq, a 2.16-to-1 ratio favored advancers. (Additional reporting by Ankur Banerjee, Gayathree Ganesan and Yashaswini Swamynathan in Bengaluru; Editing by Sriraj Kalluvila and James Dalgleish)

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