Stocks Are Strong
Monday-Wednesday’s Action: Stocks Edge Higher
Small cap stocks led the major indices higher on Monday on the first trading day of November. China’s official purchasing managers index was unchanged at 49.8 in October. In The United Kingdom, manufacturing growth unexpectedly rose to 55.5 in October which was the highest level since June 2014, as new orders surged. A Purchasing Managers Index for the euro-area also rose, coming in at 52.3, ahead of the median expectation for 52.0. In the U.S., the PMI manufacturing index rose to 54.1, matching estimates for 54.1. The ISM manufacturing index came in at 50.1, barely beating estimates for 50.0.
Stocks rallied nicely on Tuesday, led higher but energy stocks. Economic data was mixed. Factory Orders fell -1% in September, missing estimates for a decline of -0.9%. Vehicle sales in the U.S., rose to 14.5M, beating estimates for 14.1M. A slew of earnings continued to be released with some stocks gapping up and some gapping down. This is known as earnings roulette. Stocks slid on Wednesday as investors digested the latest round of economic and earnings data and listened to Dr. Yellen testify on Capitol Hill. Yellen said if the economic data improves the Fed will be open to raising rates. That doesn’t mean the Fed will raise rates, just that they are open to raising rates when the “data” improves. (Shocking, we know). ADP said private employers added 182k new jobs in October, missing estimates for 185k. The ISM service index came in at 59.1, beating the Street’s forecast for 56.7. The PMI service index matched estimates at 54.8.