Wall Street were at session highs on Tuesday morning, led by financial and technology stocks, after strong U.S. factory and construction data suggested the economy was regaining momentum after slowing in the fourth quarter.
While manufacturing activity contracted in February, steadying new orders growth and improving inventories offered signs of stability. Construction spending in January surged to the highest level since 2007.
"Things were never as bad as we thought they were and now we're realizing it," said Brad McMillan, chief investment officer at Commonwealth Financial Network in Waltham, Massachusetts.
The encouraging data will factor into the U.S. Federal Reserve's decision, when they deliberate on further raising interest rate hikes.
While Fed Chair Janet Yellen has hinted at continuing with the central bank's plan to raise rates gradually through the year, other policymakers are calling for a pause amid the turmoil in global financial markets and slowing global growth.
At 11:38 a.m. ET (1638 GMT), the Dow Jones industrial average was up 225.51 points, or 1.37 percent, at 16,742.01. The S&P 500 was up 29.8 points, or 1.54 percent, at 1,962.03 and the Nasdaq Composite index was up 85.64 points, or 1.88 percent, at 4,643.59.
The S&P and the Nasdaq were on track for their best one-day percentage gain since Feb. 17.
Nine of the 10 major S&P sectors were higher, led by a 2.3 percent rise in the financials sector, which has been the worst performing sector this year.
The technology sector was up 2.14 percent. Utilities was the only laggard.
The S&P 500 has recovered from a steep selloff at the start of 2016 is currently above its 50-day moving average, a key technical level, in a sign of increased investor optimism.
However, data outside the United States was not as encouraging.
Manufacturing activity across much of Asia, including China, shrank in February, and factory growth in Europe waned, dealing a further blow to policymakers struggling to stimulate their economies and spur inflation.
Fiat rose 5.5 percent, Ford 3.8 percent and GM 1.4 percent after strong U.S. auto sales in February, defying fears of a slowdown after a record 2015.
Honeywell rose 3.2 percent to $104.62 after dropping its bid for United Technologies. United Tech was down 3.1 percent at $93.62 and was the only laggard on the Dow.
Advancing issues outnumbered decliners on the NYSE by 2,283 to 660. On the Nasdaq, 1,822 issues rose and 756 fell.
The S&P 500 index showed four new 52-week highs and one new low, while the Nasdaq recorded 38 new highs and 44 new lows.
(Reporting by Abhiram Nandakumar in Bengaluru; Editing by Savio D'Souza)
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Updated Date: Mar 01, 2016 23:15 PM