US open: Stocks advance as oil prices rally

US stocks rose on Monday as a rally in oil prices offset disappointing manufacturing data.

The Dow Jones Industrial Average increased 1.24%, the Nasdaq gained 1.32% and the S&P 500 climbed 1.32% at 1450 GMT.

Oil prices advanced after the world’s oil consumer body said it expected a drop in production this year and next, easing concerns about the supply glut. The International Energy Agency (IEA) said in its medium-term outlook on Monday that US shale oil production was expected to fall by 600,000 barrels per day (bpd) this year and another 200,000 bpd in 2017.

West Texas Intermediate crude jumped 5.1% to $33.49 per barrel and Brent increased 4.6% to $34.60 per barrel at 1455 GMT.

In economic data, Markit’s US manufacturing purchasing managers’ index fell to 51.0 in February from 52.4 in January. Analysts had expected no change. A reading above 50 signals expansion in sector activity while a level below that indicates a contraction.

Meanwhile, Chinese business confidence declined in February, fuelling hopes of further stimulus measures. The MNI China Business Sentiment Indicator fell for the second consecutive month to 49.9 in February from 52.3 in January as production dropped to a two-year low.

In company news, shares in Lumber Liquidators Holdings plunged after the Centers for Disease Control and Prevention said cancer risks associated with the company’s flooring is higher than previously estimated.

Allergan rallied after the group narrowed its quarterly loss, boosted by better-than-expected revenue.

The dollar strengthened against main currencies, rising 2.10% against the pound, 1.06% against the euro and 0.45% against the yen.