Markets appear to have priced in 2020 madness—with stocks jumping almost 100 points in Monday trading to close at 25475.02 on the Dow.
The S&P 500 rose 11 points to 3055.73 with the Nasdaq up 62.18 to 9552.05.
The gains were something of a shock (not really) given the weekend protests and violence in the wake of the death of George Floyd while in Minneapolis police custody last week.
The widespread protests come on top of the ongoing coronavirus pandemic. They might normally send markets tumbling but optimism over manufacturing somewhat countered negative news.
Specifically, the Institute for Supply Management’s Report On Business, released Monday, found that although global manufacturing output continues to contract, the pace as which it is doing so appears to be slowing.
Manufacturing output
“The May PMI registered 43.1 percent, up 1.6 percentage points from the April reading of 41.5 percent,” the report noted. “This figure indicates expansion in the overall economy after April’s contraction, which ended a period of 131 consecutive months of growth. The New Orders Index registered 31.8 percent, an increase of 4.7 percentage points from the April reading of 27.1 percent. The Production Index registered 33.2 percent, up 5.7 percentage points compared to the April reading of 27.5 percent.”
The coronavirus pandemic impacted all manufacturing sectors for the third straight month, it added, calling May a transition month, “as many panelists and their suppliers returned to work late in the month.”
However, demand remains uncertain, “likely impacting inventories, customer inventories, employment, imports and backlog of orders,” Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management, said. “Among the six biggest industry sectors, Food, Beverage & Tobacco Products remains the only industry in expansion. Transportation Equipment; Petroleum & Coal Products; and Fabricated Metal Products continue to contract at strong levels.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
