What's Boosting Stocks Back to the Black
Yesterday’s rally brought us to another pivot point… 2009, take two:
The Dow and S&P 500 climbed 2.5% yesterday, bumping the broader index into the black for the year, with the Dow close behind. Tech stocks crossed this break-even point long ago, as the tech-heavy Nasdaq is up almost 15% year to date.
It takes a “special” kind of market to rally over 2% the day GM sold the farm. So what’s gotten into traders this week? In a word: manufacturing.
The ISM’s measure of American manufacturing scored 42.8 in May, the group reported yesterday. That’s its fifth straight monthly rise and the best reading since September 2008. At the current rate, the index will be out of the sub-50 contraction range by the end of summer… reason to buy the S&P 500 hand over fist, evidently.
Construction spending unexpectedly rose from the void too, popping 0.8% in April. According to yesterday’s Commerce Department release, that’s the biggest gain in eight months. Like the ISM’s, this gauge is still on its knees, down 10% from this time last year. But also like with the ISM’s… better to buy now and ask questions later… right?
Alas, the only truly positive manufacturing data yesterday came from China. The red nation reported its manufacturing purchasing managers index (like our ISM) scored 53 in May, its third straight month of expansion.