U.S. equities started off the month with bang, as the bulls returned on Wall Street to push major equity indexes higher at the open. A slew of upbeat economic data and strength in European and Asian markets helped fuel this morning’s rally – a nice change of pace from last week’s bumpy trading sessions. Earlier, the euro zone’s purchasing managers index for June was reported to have risen to a 16-month high of 48.8. Meanwhile on the home front, U.S. manufacturing also managed to beat expectations [see also Select Sector SPDR ETFs Head-To-Head].
The latest national manufacturing report, compiled by the Institute for Supply Management, surpassed analysts’ expectations with PMI coming in at 50.9 versus the expected 50.6 estimate. Also in July’s report, new orders, production and inventories saw modest growth, while employment contracted and supplier deliveries remained unchanged.
In the previous recording, the ISM manufacturing index was reported at 49.0, marking its largest contraction in four years (a reading below 50 indicates industry contraction). Thus far in 2013, this key index was reported below expectations in three out the last four readings [see 2012 ETFdb Portfolio].
Consider the trailing six-month ISM manufacturing data below and note the steep decrease seen in April, May and June, as well is this month’s healthy uptick:
Industrial ETFs Performance Recap
Alongside a broad-market sell-off, Industrial ETFs have struggled to stay afloat in recent weeks with many sliding into negative territory over the trailing 1-month period. Today’s upbeat ISM manufacturing report, however, may be the catalyst needed to put this sector back on track.
Year-to-date the Industrial Select Sector SPDR ETF (XLI, A) has gained 9.87%. Over the trailing 4-week period, the fund has shed 2.04%:
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Disclosure: No positions at time of writing.