US stocks up on positive economic data

Bloomberg reports that US stocks had another good day yesterday.

The Dow industrials added 29.50, or 0.2 percent, to 13,241.38. The S&P 500 increased 6.47, or 0.4 percent, to 1502.39. The Nasdaq Composite Index advanced 7.62, or 0.3 percent, to 2565.46.

Strong corporate earnings growth was a factor.

First-quarter earnings at S&P 500 companies that have reported results increased 11.9 percent. Analysts revised higher their profit growth estimate for the period to 9.4 percent from 6.2 percent two weeks ago and 3.3 percent at the start of the reporting season.

Yesterday's economic data certainly helped too.

Productivity, a measure of how much an employee produces for each hour of work, rose at an annual rate of 1.7 percent last quarter, the Labor Department said today in Washington... Meanwhile, the Institute for Supply Management's index of non-manufacturing businesses, such as banking and retailing, climbed to 56 in April from 52.4 in March...

Additional Labor Department figures showed that the number of people filing claims for unemployment benefits fell to a three-month low of 305,000 last week. The cost of labor rose 0.6 percent annual pace after jumping 6.2 percent in the prior three months, the productivity report said.

However, Asha Bangalore at Northern Trust remains skeptical about the bullish economic data.

Today’s bullish-leaning economic data, jobless claims and the ISM non-manufacturing survey, are inconsistent with other recent economic reports pointing to soft economic conditions... In our opinion, the weight of economic evidence remains pointing to weakening economic conditions – for now.

And as a reminder that the tenor of economic data can change relatively quickly, Reuters reports that the UK service sector cooled in April.

The Chartered Institute for Purchasing and Supply/Royal Bank of Scotland service sector index fell to 57.2 from 57.6 in March -- the lowest since September and below expectations for a reading of 57.5.

The prices charged index slipped to 53.9 from 55.3 in March -- denoting the lowest rate of increase in four months -- while companies' costs also showed their weakest rise this year, with the input prices index easing to 58.6 from 59.3.