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CNBC ON DIGG

August Off and Running

Published: Monday, 3 Aug 2009 | 11:28 AM ET

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By: Bob Pisani
Reporter

This post was written by CNBC producer Robert Hum

After the Dow ended with its best July in two decades, stocks are starting August on a strong note.

Strength this morning is stemming from strong manufacturing data out of Europe and China, earnings out of a couple of major European banks, and optimism over July Ford auto sales.

Commodity stocks are leading the rise today, up 3-5 percent following continued weakness in the U.S. dollar and signs of strong manufacturing expansion overseas.

Earlier this morning, data showed that manufacturing output grew in a number of European countries. In fact, U.K. manufacturing activity rose for the first time since March. Meanwhile, two manufacturing reports out of China showed further expansion in July, with the country’s PMI hitting a 1-year high.

On these encouraging reports:

1) The U.K. and German markets are at their highest levels since October, while the French markets are at their highest levels since the beginning of November.

2) Over in Asia, the Shanghai Composite hits a new 52-week high, while Hong Kong’s Hang Seng index rose to its highest level in 10.5 months.

Earnings from U.K. banks HSBC and Barclays are also helping boost stocks this morning:

1) While HSBC’s [HBC Loading... () ] first half profits were off 57 percent from a year ago, the bank’s earnings topped estimates, helped by lower impairments from its U.S. consumer finance business. Chairman Stephen Green is cautiously optimistic that “we may have passed, or are about to pass the bottom of the cycle in financial markets.”

2) Barclays’ [BCS Loading... () ] first half results slightly missed estimates, but profits still rose a solid 10 percent from the year ago period on stronger performance by its investment banking. The British bank also plans to resume dividend payments by the end of the year.

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Elsewhere:

1) Ford [F Loading... () ] up 7 percent after announcing it was poised to report its first increase in monthly auto sales in two years. The July gains were boosted by the government’s “Cash for Clunkers” initiative. Of course, all eyes will be on whether the Senate will approve the House-passed bill which would provide another $2 billion to the very successful vehicle trade-in program.

2) Clorox [CLX Loading... () ] down 4 percent despite beating Q4 earnings estimates. Sales were inline with estimates though, as price increases offset lower volumes and the effects of the stronger dollar. Looking ahead, the consumer products manufacturer reaffirms 2010 guidance of $4.00-$4.15, a tad lighter than expectations of $4.17.

3) Tyson Foods [TSN Loading... () ] reported earnings above analyst forecasts ($0.33 vs. $0.22 est.). Although total sales fell 3 percent, and just missed estimates, stronger results from its chicken operations offset weaker performance in its beef and pork businesses. The difference: amid a 5 percent rise in volumes, chicken prices rose 2 percent, whereas beef prices dropped 11 percent and pork prices fell 10 percent.