Manufacturing Surveys and Jobs Data

Optimism that the economy is recovering in the third quarter has allowed the benchmark S&P 500 to rebound by 52% since early March, but in the past week markets were unimpressed with fresh data, even though most of it was positive. Analysts said investors were not sure the rapid 5-month gain in markets was justified, leading many to take profits while they could, pushing their cash from risky equities into bonds. A rally in Treasuries caused the 10-year yield to fall from 3.60% last Monday to 3.45% this morning.

Looking to this week’s data, the trends are looking positive for equities. “Following a pattern that has provided good buoyancy to corporate profits and the stock market for a number of weeks, the economic reports next week are expected to cross the plate with a generally positive spin,” said analysts from IHS Global Insight.

Major releases this week includes the ISM manufacturing survey, a key index based on the opinion of manufacturing executives across the country, which is expected to cross the threshold into growth mode after 19 months of contraction. Its cousin index, the ISM services index, is expected to show that deterioration in the services, financial, and construction industries is slowing though not quite stabilizing. On Friday, the Employment Situation survey is expected to report that 200k payrolls were cut in August â€