Mid-Day Recap: Equities Tank Despite Encouraging Data
Stock markets opened lower on Tuesday morning, jumped more than 1% on mostly positive data thirty minutes into the session, but in a complete reversal an hour later, equities turned course and dipped almost 2.00% into the red.
At 1:30pm, all three US indexes are trading near their lowest points of the day. The S&P 500 has fallen 1.97% to 1,000, while the Dow is trading 1.84% lower at 9,321, and the NASDAQ has shed 1.89% to 1,971.
The sell-off comes after a series of reports suggesting broad economic recovery is picking up mid-way through the summer. Yet investors remain skeptical. Many believe the rapid rise in equity prices from early March to August, which saw markets gain 50%, was not justified by fundamentals in economic data or earnings.
“I don't think there's a consensus that this economy has legs,” said Firas Askari, head of currency trading at BMO. “You can make an argument either way, but the best we can do now is wait. I don't think anybody really knows, which is why I advocate keeping positions small and close to home.”
Today’s key report was the Institute for Supply Management’s manufacturing survey, which climbed to its highest level since June 2007 in August, hitting growth mode after 19 months of contraction.
New orders for manufactured goods were at their highest level since late 2004, according to the closely-watched survey, which consults manufacturing executives from across the country.
“The year-and-a-half decline in manufacturing output has come to an end,” said Norbert J. Ore, rather boldly, in the ISM press release.
The overall score in the index was 52.9, nearly 3 points above the 50 threshold marking growth. That’s a huge improvement from the 32.9 score seen last December â€
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