U.S. stocks rally on upbeat economic data

13:40, June 15, 2011      

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The U.S. stocks rallied on Tuesday, shaking off six straight weeks of declines, as economic data came in better than expected, easing some concerns about a slowing recovery.

The blue-chip Dow Jones industrial average stood firmly above 12,000, after increasing 123.14 points, or 1.03 percent, to close at 12,076.11.

The Standard & Poor's 500 jumped 16.04 points, or 1.26 percent, to 1,287.87. The Nasdaq Composite Index rose 39.03 points, or 1.48 percent, to 2,678.72.

Stocks were pressured since May as economic data from all sectors showed signs of weakening.

Not only have home prices fallen back to the lowest level since recession, the manufacturing sector, once leading the economy on the path of recovery, has also notably weakened.

Even more bothering, the non-farm sector added merely 54,000 new jobs in May, far short of the 200,000 monthly level which economists believe is robust enough to slash the unemployment rate over the long run, according to the latest government jobs report.

As a result, the unemployment rate rose to 9.1 percent in May from 9 percent in the previous month, reversing a four-month decline of the widely scrutinized figure.

After days of sell-off, investors were very relieved to hear some good news, even though they are not so bullish.

Data from China also turned out to be encouraging, which showed industrial output was 13.3 percent higher than year-ago levels, signaling the growth in the world's second biggest economy was still robust.

In the United States, retail sales fell 0.2 percent in May as consumers bought fewer cars as a result of supply disruptions caused by the earthquake and tsunami in Japan,according to the Commerce Department.

It was the first decline for retail sales in nearly a year. However, the result was still better than average estimates, showing consumers were weathering elevated gasoline costs.

Also lifting the stocks, the government reported that wholesale prices rose by the smallest amount in 10 months in May.

Data showed the U.S. PPI growth eased to 0.2 percent in May from 0.8 percent in April, the slowest pace in 10 months, as the prices of food and energy cooled. Slowing inflation was regarded as a boost for consumer spending.

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