The numbers: The New York Federal Reserve’s Empire State business conditions index rose 8.1 points to 12.9 in February, the bank said Tuesday. This is the highest level since last May. Economists had expected a reading of 4.0, according to a survey by Econoday. Any reading above zero indicates improving conditions.

What happened: The new orders index rose 15.5 points to 22.1 in February, the highest level in over a year. The shipments index also had a strong gain, rising 10.3 points to 18.9. Labor market indicators remained soft. Delivery times lengthened and inventories increased sharply.

Optimism remained somewhat subdued. The index for future business conditions was little-changed at 22.9.

Big picture: Many regional manufacturing indexes and the national ISM manufacturing index registered surprising gains in January, raising hopes of a turnaround in a sector of the economy which has been hit hard by the U.S. – China trade war and a weak global economy. There appears to be no disruption, at least not yet, from the deadly viral outbreak in China.

What are they saying? “Phase One of the U.S./China trade deal appears to have eased uncertainty and helped a rebound in activity after several quarters of slow business,” said T.J. Connelly, head of research at Contingent Macro.

Market reaction: U.S. equity benchmarks opened lower after Apple Inc.

AAPL, -2.33%

said the COVID-19 outbreak, which originated in Wuhan, China, would hurt its second-quarter results. The Dow Jones Industrial Average

DJIA, -0.32%

 was down 102 points in early trading.