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| Manufactured Inspirato 2004 (Photo credit: Koo's) |
"It's a sigh of relief for the markets," says Jeff Kleintop, chief market strategist at LPL Financial. "Manufacturing is so important to the S&P 500, while it's only 20% of our economy, it's nearly 40% of S&P 500 profits."
In fact, data shows that over the past 50 years, there have been no less than 7 recessions in the U.S., and each them coincided with a plunge in the ISM Manufacturing to at least the mid-40s level. While that type of factory slowdown is to be expected, what isn't is the fact that there have also been a half dozen false positives or "flukes" Kleintop says, an issue that must be respected.
From his viewpoint, it is important to recognize that "manufacturing may not be as weak as we had thought" especially given the concurrent spike in new orders, which Kleintop calls the ''most important component."
"We don't usually get sharp reversals in this index. It usually trends lower for a year or so, then turns and rises," he says, adding that more data will be needed to confirm it.
The October ISM report comes out Thursday, November 1st -- the day before the final payroll and unemployment report is released and just 5 days before the election. ... Continue to read.
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