Nasdaq hits 5K; Dow adds 100 points amid data, China rate cut

The Nasdaq briefly touched the psychologically important level of 5,000 on Monday as investors cheered U.S. economic data and an interest rate cut in China.

“We’ve got economic data that continues to move things forward. I would mach rather see 5,000 on improving economic data than the (conditions we had in March 2000),” said Art Hogan, chief market strategist at Wunderlich Securities.

The Dow Jones industrial average also rose more than 100 points following mostly encouraging economic reports. McDonald’s and Visa led blue chip advancers.

“The news out of China cutting its benchmark interest rate and better-than-expected inflation news out of the euro zone are providing a lift to the U S market,” Peter Cardillo, chief market economist at Rockwell Global Capital, said in a note. “However, it’s the beginning of a very intense week of domestic economic data which we see steering the indices.”

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The U.S. manufacturing sector had its best gains since October, according to Markit’s final Manufacturing Purchasing Managers’ Index that rose to 55.1 in February from 53.9 in January.

ISM Manufacturing for February was 52.9, its slowest pace in 13 months. Construction spending fell 1.1 percent in January.

Personal income increased of 0.3 percent, while personal spending fell 0.2 percent in January.

“All in all I think it’s a reasonably good report, even with the West Coast port shutdown, and the market is liking it,” said Doug Cote, chief market strategist at Voya Investment Management.

The People’s Bank of China (PBOC) cut benchmark interest rates by 25 basis points to 5.35 percent on Saturday as deteriorating economic conditions forced the central bank to shorten the time gap between policy moves.

The HSBC/Markit Purchasing Managers’ Index (PMI) for China climbed to 50.7 in February—the strongest level since July—from the contraction level of 49.7 in January, as overall new orders picked up. However, the survey indicated that manufacturing contracted significantly as the firms struggled to cope with erratic export demand and deflationary pressures.

In corporate news, HP announced on Monday it will acquire Aruba Networks for approximately $2.7 billion.

Costco announced a new credit card program agreement with Citi, supported by Visa‘s network. The warehouse retailer failed to renew terms with American Express after a 16-year partnership.

Sotheby’s reported adjusted earnings of $1.12 that missed estimates on revenue of $351.2 million that beat expectations.

Companies reporting after the bell include Mylan Labs, Palo Alto Networks and Salix Pharma.

Berkshire Hathaway is in focus following the release of Warren Buffett’s annual investment letter and the company’s latest earnings. Those numbers did fall short of estimates, and Buffett said it was likely that although Berkshire would outperform other companies in the future, its size may make it impossible to equal past gains.

Symbol
Name
Price
Change
%Change
DJIA Dow Jones Industrial Average 18246.63 113.93 0.63%
S&P 500 S&P 500 Index 2112.79 8.29 0.39%
NASDAQ Nasdaq Composite Index 4997.15 33.62 0.68%

Over the weekend, NXP announced it is buying rival Freescale Semiconductor for about $11.8 billion in cash and stock, for a deal valued at $40 billion total. Freescale stockholders will receive $6.25 per share in cash and 0.3521 NXP shares for each share they now hold.

“Look for other names in those (M&A) sectors to trade up in sympathy,” said Art Hogan, chief market strategist at Wunderlich Securities.

Asian markets were trading higher Monday following the move to stimulate the world’s second largest economy.

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In Europe, stocks turned lower with oil prices. Earlier, investors cheered data showing that deflation in the euro zone eased in February while the rate of unemployment fell in January.

Crude oil traded around $49 a barrel and Brent crude traded near $61 a barrel. Gold held above $1,200 and ounce.

The Dow Jones Industrial Average traded up 110 points, or 0.61 percent, to 18,244.19, with McDonald’s leading gains and Chevron the greatest laggard.

The S&P 500 gained 7 points, or 0.37 percent, to 2,112, with consumer discretionary leading six sectors higher and utilities the greatest laggard.

The Nasdaq traded up 31 points, or 0.62, to 4,994.

The U.S. 10-year Treasury yield traded near 2.03 percent. The U.S. dollar edged lower against major world currencies.

About two stocks advanced for every decliner on the New York Stock Exchange with an exchange volume of about 150 million and a composite volume of 643 million in mid-morning trade.

CNBC.com contributed to this report.

On tap this week:

Monday

Mobile World Congress

Earnings: Mylan Labs, Palo Alto Networks, Salix Pharmaceuticals, Caesars Entertainment

Tuesday

Auto Sales

Earnings: Bank of Nova Scotia, Barclays, AutoZone, Best Buy, Dick’s Sporting Goods, Smith & Wesson, TiVo

Wednesday

Earnings: Brown-Forman, Abercrombie & Fitch, H&R Block, PetSmart

7 a.m.: Mortgage Applications

8:15 a.m.: ADP Employment Report

9:45 a.m.: PMI Services Index

10 a.m.: ISM Non-manufacturing Index

10:30 a.m.: Oil inventories

2 p.m.: Beige Book

Thursday

Chain store sales

ECB Governing Council Press Conference

Earnings: Costco, Canadian Natural Resources, Kroger, JoyGlobal, Cooper Cos., Diamond Foods, Finisar, Quiksilver

7:30 a.m.: Challenger Job-Cut Report

8:30 a.m.: Jobless claims

8:30 a.m.: Productivity & Costs

10 a.m.: Factory orders

10:30 a.m.: Natural gas inventories

4:30 p.m.: Fed balance sheet/Money supply

Friday

Weekly rig count

Earnings: Foot Locker, Staples

8:30 a.m.: Nonfarm payrolls

8:30 a.m.: International trade

3 p.m.: Consumer credit

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