The stock market has gain traction today against the backdrop of disappointing news including Chicago PMI which landed with a thud coming in at 47.1 from 50.4.  Wall Street was looking for 50.5 but it turns out the GM strike is having a larger impact than anticipated.

The barometer of Chicago area manufacturing businesses has slipped into contraction in three of the last four months.

• Production 47.1 from 50.4
• New Orders 48.5 from 53.4
• Prices 57.8 from 59.8
• Backlog 46.8 from 53.4
• Inventories 41.7 from 47.9

Inventories are intriguing because the more I hear businesses say they’re pulling back on investments as a precaution I wonder how much they are taking into consideration demand. 

For Chicago PMI employment was one of the few bright stops climbing to 45.6 from 43.7.

Thor Industries (THO)

Case in point, Thor Industries (THO) is up 20% today after posting financial results that crushed Wall Street consensus. 

European sales saved the day as North American divisions saw declines:

• Towable -17.6%
• Motorized -8.1%

Yet management pointed to US dealer inventories at two-year lows as positives.  It’s a dangerous gambit to assume a worst case scenario and then make it a reality.   Moreover, while business continue to threaten no investments and allow inventories to run dry, it means they won’t be able to meet demand or stay competitive. 

It’s not a smart way to conduct business.

Board Market

I’m impressed with the board market lead by a rebound in technology stocks.  An upgraded target at JP Morgan helping to lift Apple shares to top spot in tech sector.  JP Morgan increased its iPhone estimates and placed new share price target $265 from $243. 

Apple is one of my core must own stocks.