US Manufacturing Suffers 13-Month Contraction Streak In November, Falling Short of Forecasts
Portfolio Pulse from Piero Cingari
The U.S. manufacturing sector recorded its thirteenth consecutive month of contraction in November, with the ISM Manufacturing PMI remaining at 46.7, below forecasts of 47.6. Key indexes such as New Orders, Production, and Employment all indicated contraction, while the Prices Index showed a significant increase. S&P Global's U.S. Manufacturing PMI also contracted to 49.4. Treasury yields fell, and the iShares 20+ Year Treasury Bond ETF (TLT) rose slightly, while tech stocks dropped, as seen with the Invesco QQQ Trust (QQQ). Small caps tracked by the iShares Russell 2000 ETF (IWM) increased.
December 01, 2023 | 4:16 pm
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POSITIVE IMPACT
The iShares Russell 2000 ETF (IWM) rose 0.5%, potentially benefiting from a shift in investor focus towards smaller companies amid manufacturing sector concerns.
Investors might be turning to small caps, which can be more domestically focused and agile, as reflected in IWM's price increase.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 70
POSITIVE IMPACT
The iShares 20+ Year Treasury Bond ETF (TLT) rose 0.1% as Treasury yields fell, indicating a move towards safer assets amid manufacturing sector weakness.
The contraction in manufacturing could lead investors to seek safer assets, such as long-term Treasury bonds, which is reflected in the slight increase in TLT's price.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 70
NEGATIVE IMPACT
The Invesco QQQ Trust (QQQ) fell 0.5% possibly due to concerns over the manufacturing sector's impact on the broader economy and tech sector.
The contraction in manufacturing could be a negative signal for the tech sector's future growth, leading to a decrease in QQQ's price.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 70