US open: Stocks gain ground despite poor ISM data

US equities rallied early on Tuesday, as Wall Street looked to begin December on the front foot, despite some disappointing manufacturing data

Shortly before 1500 GMT, the Dow Jones Industrial Average was 146 points up to 17,865.70, while the S&P 500 and the Nasdaq were 17 and 33 points higher respectively.

ISM index hits six year-low

On the macroeconomic, the US ISM manufacturing index fell to its lowest level since July 2009 last month, sliding to 48.6 from 50.1 and falling short of analysts’ expectations for a 50.5 reading.

The final reading of the Markit manufacturing purchasing managers’ index for November declined from 54.1 in October to 52.8, reaching its lowest level since October 2013, although the figure was marginally above the 52.6 flash estimate released last month.

Soon after, at 1500 GMT, the Institute for Supply Management’s index of manufacturing is scheduled for publication and is expected to have risen from 50.1% in October to 50.5%.

A reading on construction spending for October is also out at 1500 GMT.

The US central bank is widely expected to signal a first lift-off in almost a decade at its 15-16 December meeting after a strong set of economic data in November, but data released this week could provide further indication over the Fed’s intentions.

”Monday saw the Dow fall following weak data, unusual for the index given how it has traded throughout the year,” said Spreadex’s financial analyst Connor Cambell.

“Tuesday’s figures will test then just how far the good is bad/bad is good pattern has reversed.”

Investors will also hear from a number of Fed speakers, with Chicago Fed President Charles Evans set to give a speech on the economy at Michigan University at 1745 GMT, while Fed governor Lael Brainard will talk about “Lower Neutral Rate and its implications for Monetary Policy” in California at 2300 GMT.

In company news, software group Infoblox surged 20.3% after reporting better-than-expected results late on Monday, while HF Financial jumped 18.2% after agreeing to a $139.4m takeover offer from Great Western Bancorp.

Elsewhere, Asian stocks rallied as investors pinned their hopes on expectations Chinese authorities will soon introduce fresh stimulus measures, while European equities moved in tight ranges.

The dollar was broadly flat against the yen but fell 0.47% and 0.12% against the euro and the pound respectively, while gold spot rose 0.34% to $1,068.35.

Oil prices edged lower, as West Texas Intermediate rose 0.14% to $41.59 a barrel, while Brent crude shed 0.59% to $44.35 a barrel.