Lifting stock sentiment, service sector activity in the U.S. grew at a slightly faster rate that expected in May, expanding for the 29th consecutive month, industry data showed on Tuesday.
In a report, the Institute of Supply Management said its non-manufacturing purchasing manager's index inched up by 0.2 points to 53.7 in May from a reading of 53.5 in April.
Analysts had expected the index to hold steady at 53.5 in May.
On the index, a reading above 50.0 indicates the non-manufacturing sector economy is generally expanding, below 50.0 indicates the sector is contracting.
The New Orders Index increased by 2.0 points to 55.5 from 53.5, while the Employment Index decreased by 3.4 points to 50.8 from 54.2, indicating continued growth in employment at a slightly slower rate.
The Prices Index fell by 3.8 points to 49.8 from 53.6, indicating prices increased at a significantly slower rate in May when compared to April.
However, sentiment waned after Spain’s Treasury Minister Cristobal Montoro said earlier that financial markets were effectively closed to Spain because of the current high level of the country’s borrowing costs.
Meanwhile, revised data showed that the euro zone's services sector contracted at a slightly slower rate than initially expected in May, but still shrank at the fastest pace since June 2009, while another report showed that retail sales in the bloc dropped 1% in April.
Investor confidence had improved earlier, ahead of a teleconference of G7 finance ministers later Tuesday, to discuss the euro zone’s debt crisis.
Retailers were among the session’s top losers, as Home Depot dropped 0.41% and Wal-Mart declined 0.56%, while Costco Wholesale Corp. saw shares retreat 0.55%.
Courier giant FedEx Corp. also dropped 0.62% after saying earlier that it retired 24 jets to cut capacity in the U.S. domestic Express division, as a slowing economy saps shipping volumes for the operator of the world’s largest cargo airline.
In the energy sector, Exxon Mobil fell 0.12% after CEO Rex Tillerson said the company is considering exporting liquefied natural gas from the U.S. Shares in rival company Chevron were down 0.24%.
On the upside, financial stocks were broadly higher. Shares in Bank of America jumped 1.88% and JP Morgan climbed 1.45%, while Citigroup and Goldman Sachs advanced 1.69% and 1.05% respectively.
The New York Times reported on Monday that Goldman Sachs cut fewer than 50 jobs last week in order to trim expenses, as the U.S. lender’s revenue prospects worsen. The reductions included some managing directors, the second-highest position at the firm after partners.
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