Evidence of a Manufacturing Renaissance
After eight straight losing sessions on Tuesday, the Dow Jones Industrial Average finished 150 points higher, lifting the index to its highest closing level since March 20th.
For the broad market, the best performing sector was energy, followed by financials and materials.
Transportation Leads the Way
Industrial names also enjoyed a solid outing; paced by a strong rebound in transportation names where United Continental (UAL) was the biggest winner +3.5% (I guess leggings-gate isn’t having a material impact on the company).
Overall, the Dow Jones Transportation (DJT) Index is up almost 16% in the past 52-weeks and bounced off a key support point yesterday.
By the way, I am old-school and I believe the Dow Theory, with respect to the fact that transportation names must lead and participate in a broad stock market rally to give it credence.
One of the catalysts for Tuesday’s session is continual evidence of a Manufacturing Renaissance.
Face it, the country is clamoring for a rebound in the economy that centers on a manufacturing boom. While a lot of focus has been on bringing jobs back, the reality is there is a lot of room for organic growth in new industries, where America is creating the technology and the expertise in the first place.
On that note, there was yet another great report on manufacturing. This one is from the Richmond Federal Reserve, which posted a read that was 47% better than expected. In fact, the headline 22.0 is the strongest report since April 2010.
While the headline blowout was impressive, the details are even more encouraging, adding credence to the notion that we are indeed at the beginning of a Manufacturing Renaissance. In addition, capacity utilization surged to its highest level since April 2010, which means businesses are cleaning off the cobwebs, firing up the engines, and that means new jobs.
Speaking of jobs, all data points for employment indicate greater hiring and higher wages.
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