Stocks Reach New Record Highs on Manufacturing Data

Manufacturing Reports 13-Year High – Today the Institute for Supply Management released its manufacturing index for the month of September, reporting a surge in factory activity that was partially driven by the recovery impact of Hurricanes Harvey and Irma.  The overall level was 60.8 (vs. 50.8 expected) – the highest it has been since May 2004.  The most direct impact from the storms could be seen in the longer lead times reported by suppliers, which is represented as strength in the report as producer demand increases.  New orders also jumped due to the hurricanes, rising 4.3 points to a four-year high of 64.6 and marking the sixth consecutive new orders reading over 60.0.   

 

Stocks Rise with Robust Data

All three major US stock indices hit new record highs to open the fourth quarter, posting gains of 0.3%-0.7% in the trading session where headlines were dominated by the deadliest American mass shooting on record.  As has been become all too common in the aftermath of such tragic events, shares in firearm-related companies experienced the largest uptick in prices.  Treasurys held within a tight range throughout the day, with the 10-year note yield rising 1 basis point to 2.34%.  In commodities, crude oil tumbled after it was reported that Saudi Arabia and three other OPEC members increased production last month.  WTI crude fell more than 2% during today’s session and is currently trading near $50.50/barrel.

The US dollar rose 0.5% to a three-month high against major currencies, highlighted by a 0.7% gain against the euro and 0.9% increase vs. the British pound.  In Europe, violence erupted Sunday during the referendum vote for independence in Catalonia, where 90% of the 2.3 million votes cast were in favor of secession from Spain.  Spanish Prime Minister Mariano Rajoy denounced the legitimacy of the vote, calling it a “grand farce”, while declaring the Catalan government “delegitimized.”  The Catalan parliament had promised independence with 48 hours of a “yes” vote and is now seeking assistance from the EU to mediate a split from Spain.