Economic data negative, markets rally

Economic reports on Tuesday were mostly negative.

In the US, the Richmond Federal Reserve Bank's index of factory activity fell from minus 1 in July to minus 10 in August, the lowest reading since June 2009, while new single-family home sales fell 0.7 percent in July to a 298,000-unit annual rate, the lowest since February.

Elsewhere, flash PMIs show economic growth weakening.

In the euro area, the services PMI edged down from 51.6 in July to 51.5 in August. The manufacturing PMI fell from 50.4 to 49.7 in August, falling below 50 for the first time since September 2009. The composite index, though, stayed unchanged at 51.1.

In China, HSBC's Flash China Manufacturing PMI rose from 49.3 in July to 49.8 in August but remained below the 50 mark.

In spite of the negative economic data, markets rose on Tuesday. Bloomberg reports:

The MSCI All-Country World Index added 2.3 percent at 7:17 p.m. in New York, as weaker-than-anticipated U.S. economic data increased optimism for stimulus measures. The Standard & Poor’s 500 Index jumped 3.4 percent to 1,162.35, paring gains briefly after an earthquake shook New York and Washington. Oil rallied 1.2 percent. The Dollar Index fell 0.3 percent. The yen slid against the U.S. currency after Moody’s Investors Service cut Japan’s sovereign-credit rating. Gold sank the most since May.