US stocks rally with emerging market assets as crude tops $34

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US stocks rallied to a seven-week high after data indicated manufacturing in the world’s largest economy may be stabilizing, while optimism that central banks from Asia to Europe will add to stimulus supported emerging-market currencies and commodities.

The Dow Jones Industrial Average surged more than 340 points, while the Standard & Poor’s 500 Index rebounded from a two-day drop, climbing back to a level last seen at the start of the year. A gauge of emerging-market shares advanced the most since Feb. 15 as the ruble and Brazil’s real strengthened. Yields on 10-year Treasury notes jumped nine basis points to 1.83 percent, while gold fell following its steepest monthly rally since 2012. Crude topped $34 a barrel in New York, while the yen pared back some gains.

While February marked a fourth consecutive monthly slide for global stocks, signs that financial tension in China and a slump in commodities are abating has seen shares recover more than 5 percent since Feb. 11. Data suggesting that American consumers can still power the world’s largest economy and hints from central banks in Asia and Europe that more stimulus is at the ready underpinned the revival.

U.S. equities got a boost after data showed American factory activity in February shrank less than forecast as gains in new orders and production provided signs that the beleaguered industry could soon stabilize. Manufacturing should also find a source of strength in domestic demand, which is being boosted by consumers with solid job gains and a nascent pickup in wage growth. A rebound in oil prices in the final two weeks of February also helped stabilize equity markets.

“The numbers today were pretty decent with manufacturing up from estimates and the construction numbers were pretty good as well so if inflation keeps moving over the next few months that could be a good thing as we started the year talking about negative rates and deflation,” Mark Kepner, an equity trader at Chatham, New Jersey-based Themis Trading LLC, said by phone. “Financials are also bouncing back after getting beat and as we get some stability in oil prices, things are looking a little better.”

Stocks

The S&P 500 climbed 2.4 percent to 1,978.35 as of 4 p.m. in New York, rallying from a decline Monday that erased its gain in February. The index’s three-month decline is the longest since 2011, though its 8.2 percent surge since Feb. 11 has cut the loss in 2016 by more than half. 

Financial companies led stocks higher Tuesday with a 3.5 percent advance, the biggest gain since Feb. 12. Northern Trust Corp. climbed 5.3 percent and Legg Mason Inc. added 5.8 percent as all but two stocks in the group rallied.

Auto stocks advanced, with Ford Motor Co. surging 4.6 percent and Fiat Chrysler Automobiles NV jumping 5.3 percent after their February sales beat analysts’ estimates. General Motors Co. gained 1.9 percent.

The Stoxx Europe 600 Index climbed 0.8 percent, with all industry groups rising at least 0.8 percent. The European equity benchmark has rebounded more than 11 percent since falling to a 2013 low on Feb. 11, led by miners and energy producers.

BMW AG gained 4.2 percent after its chief executive officer forecast another year of record sales, and Daimler AG added 2.5 percent after its CEO noted strong growth in Europe and China. London Stock Exchange Group Plc surged 7.2 percent after Intercontinental Exchange Inc. said it’s considering a bid for the company that’s in merger talks with Deutsche Boerse AG.

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