Stocks mixed as strong U.S. retail sales offsets weak European manufacturing data

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NEW YORK (Reuters) – A gauge of global stocks fell on Thursday after underwhelming manufacturing surveys from Asia and Europe, though they pared losses as Wall Street edged higher on strong U.S. retail sales data and earnings from industrial companies.

FILE PHOTO: The London Stock Exchange Group offices are seen in the City of London, Britain, December 29, 2017. REUTERS/Toby Melville

The U.S. benchmark S&P 500 index inched forward as healthcare shares, which have been under pressure from Democratic proposals to extend Medicare coverage to more Americans, trimmed their declines. Strong March retail sales data, which registered their greatest increase in 1-1/2 years, and upbeat results from Union Pacific Corp and Honeywell International Inc also supported U.S. stocks.

The MSCI All-Country World Index fell 0.1% but came off session lows to tick just above last Friday’s closing level.

Lackluster French and German surveys of purchasing managers in the manufacturing sector for April, which showed activity continuing to contract, prompted selling among some investors.

Activity in Germany’s services sector rose to a seven-month high in April, but investors focused on the 44.5 reading for the manufacturing sector, well below the 50.0 mark separating growth from contraction even if it was above the 44.1 reading last month.

The weak surveys out of Europe added to a reading of Japanese manufacturing activity which showed new export orders fell at the fastest pace in almost three years.

“The flash PMIs that came out were very weak,” said John Vail, chief global strategist at Nikko Asset Management. “But retail sales were strong, so that helped (U.S. stocks), and earnings were strong.”

The release of Special Counsel Robert Mueller’s report on Russia’s role in the 2016 U.S. election had little impact on Wall Street.

“It’s probably the news story of the day, but there’s probably no epiphanies or surprises that the market hadn’t anticipated,” said Darrell Cronk, chief investment officer for wealth and investment management at Wells Fargo in New York.

The Dow Jones Industrial Average rose 133.37 points, or 0.5%, to 26,582.91, the S&P 500 gained 5.79 points, or 0.20%, to 2,906.24 and the Nasdaq Composite added 1.64 points, or 0.02%, to 7,997.72.

The underwhelming French and German manufacturing survey data hit European stocks in early trade, but short-covering helped the pan-European STOXX 600 index end 0.2% higher.

The data, however, pushed down yields on German Bund and U.S. Treasury yields.

Benchmark 10-year Treasury notes last rose 9/32 in price to yield 2.5596%, from 2.592% late on Wednesday.

“The retail sales report was great, but (investors) seem to be focused on the fact that the data are struggling out of Europe,” said Mary Anne Hurley, vice president of fixed income trading at D.A. Davidson in Seattle, referring to activity in U.S. Treasuries.

The euro also fell to its lowest in more than a week after the European manufacturing data, and was last down 0.6% on the day at $1.1229.

Conversely, the dollar index, which measures the greenback against a basket of six major currencies, rose 0.5% on the strength of U.S. retail sales data.

Oil prices rose after a drop in crude exports from OPEC’s de facto leader, Saudi Arabia, and a draw in U.S. oil inventories, though the strengthening dollar capped gains.

Brent crude futures rose 34 cents to $71.96 a barrel, a 0.5% gain. U.S. West Texas Intermediate (WTI) crude futures rose 19 cents to $63.95 a barrel, a 0.3% gain.

Reporting by April Joyner; Additional reporting by Richard Leong, Karen Brettell, Gertrude Chavez-Dreyfuss, Stephanie Kelly and Laila Kearney in New York, Ritvik Carvalho and Abhinav Ramnarayan in London and Shinichi Saoshiro in Tokyo; Editing by Bernadette Baum and Diane Craft

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