By Geoffrey Smith
Investing.com -- U.S. stocks bounced sharply at the opening on Monday as a measure of confidence returned to markets in the absence of game-changing news regarding the novel coronavirus outbreak in China.
Markets that had had their worst week in months opened as much as 0.7% higher, not least on the back of reports that products from U.S. pharma giants Gilead (NASDAQ:GILD) and AbbVie (NYSE:ABBV) had had encouraging results in treating the disease.
Gilead) stock rose 4.3%, while AbbVie (NYSE:ABBV) stock rose 1.5%.
By 10:23 AM ET (1523 GMT), the Dow Jones Industrial Average was up 325 points, or 1.2%, while the S&P 500 was up 1.2% and the Nasdaq Composite was up 1.5%.
The overall tone was helped by the Institute of Supply Management’s monthly business survey, where the main index showed activity rising to 50.9, its highest since August. Other purchasing manager indices published in China and Europe had shown a weaker picture. The eurozone manufacturing PMI was still below the 50 level that separates growth from contraction despite hitting an 11-month high of 47.9.
Airline stocks recovered a little of their poise after spreading bans on flights into and out of China undermined the outlook for the current year. American Airlines (NASDAQ:AAL), Delta Airlines (NYSE:DAL) and United Airlines (NASDAQ:UAL) were all between 2.5% and 3.0% higher.
The biggest gainer, however, was Nike (NYSE:NKE) stock. The sportswear giant rose 4.1% after UBS and JPMorgan (NYSE:JPM) both upgraded it, the latter putting it on its “analyst focus list”, saying that last week’s selloff had created a rare buying opportunity.
Nike is exposed to any short-term weakness in the economy because it gets around 16% of its sales from China and sources nearly one-third of its shoes and other sports gear there.
Another stock exposed to China fared less well. Apple (NASDAQ:AAPL) opened lower but turned around to be 1.0% higher, despite saying it would keep its Chinese stores and corporate offices closed for another week after the end of the Lunar New Year holidays.
However, oil and gas stocks continued to underperform as U.S. crude futures market shrugged off reports of deeper production cuts by OPEC and its allies. The global benchmark Brent fell 1.3% to $55.89 a barrel.
Gold futures edged down 0.6%, retracing Friday's gains, while the dollar index, which tracks the greenback against a basket of developed market currencies, rose 0.5% to 97.68, chiefly reflecting gains against sterling and the euro.