U.S. manufacturers enjoy 3rd straight month of growth
American factories expanded for the third straight month in November, another good sign for the American economy.
The Institute for Supply Management says its manufacturing index came in at 53.2 last month, up from 51.9 in October and highest since June. Anything over 50 signals growth.
New orders and production grew faster in November. Hiring and export orders increased, but more slowly than they did in October. Eleven of 18 manufacturing industries reported growth last month, led by petroleum and coal producers.
American manufacturing retreated from October 2015 through February in the face of economic weakness overseas and a strong dollar, but factories began to recover as the dollar tumbled in the first half of the year.
The ISM manufacturing index has topped 50 for eight of the last nine months.
The Commerce Department said last week that orders for big-ticket manufactured goods — particularly commercial aircraft — increased in October by the most in a year.
The Commerce Department reported Tuesday that the U.S. economy grew at an annual rate of 3.2 percent from July through September, the fastest in two years. The unemployment rate is 4.9 percent, close to what economists consider full employment. Employers have been adding 181,000 jobs a month so far this year, solid but down from 229,000 a month in 2015.
The Conference Board reported this week that U.S. consumer confidence rose to the highest level in more than nine years last month. And the stock market has rallied since the Nov. 8 election of Donald Trump as president.
“Early indications of a strong post-election rise in business sentiment, along also with a surge in consumer confidence, should support further (manufacturing) gains going forward,” Morgan Stanley economist Ted Wieseman wrote in a research report.
Technology companies plunged Thursday, and high-dividend stocks also took hefty losses as bond yields rose to their highest level in more than a year. But more big gains for blue-chip banking and oil stocks pulled the Dow Jones industrial average to a record high.
Big names like Facebook and Oracle fell as technology companies took their biggest losses in two months. Rising bond yields pushed income-seeking investors away from real estate and utility companies. Health care stocks also slumped.
Banks continued to soar as investors expect them to make bigger profits on loans as interest rates rise. Oil prices climbed for the second day after the countries of OPEC agreed to trim oil production next year.
Karyn Cavanaugh, senior market strategist for Voya Investment Strategies, said a focus on President-elect Donald Trump’s trade policies might be hurting tech stocks.
On Thursday Trump toured a Carrier factory in Indiana after announcing the company will keep some operations at the facility instead of moving them to Mexico. He warned of consequences for companies that send jobs out of the country.
“If you’re going to bring jobs back to America and make stuff here, tech is going to be pretty vulnerable,” she said. “If there’s going to be a trade war, tech is pretty vulnerable.”
The Dow gained 68.35 points, or 0.4 percent, to 19,191.93, its highest close on record. The Standard & Poor’s 500 index dropped 7.73 points, or 0.4 percent, to 2,191.08. The Nasdaq composite fell 72.57 points, or 1.4 percent, to 5,251.11.
Stock indexes set records after the presidential election last month, but lately they have wobbled as different industries were pulled in opposite directions. Banks and industrial and materials companies are rising while tech stocks have weakened.
Bond prices continued to tumble, sending benchmark yields higher. The yield on the 10-year Treasury note rose to 2.44 percent from 2.38 percent, its highest since July 2015. That sent bank stocks higher because higher bond yields are linked to higher interest rates, which allow banks to make more money from lending.
Goldman Sachs jumped $7.34, or 3.3 percent, to $226.63 and JPMorgan Chase picked up $1.62, or 2 percent, to $81.79. Goldman is trading at its highest price since December 2007.
Facebook skidded $3.32, or 2.8 percent, to $115.10 and chipmaker Analog Devices dropped $5.23, or 7 percent, to $69.01. Microsoft lost $1.06, or 1.8 percent, to $59.20.
After a big gain Wednesday, the dollar slipped to 114.04 yen from 114.22 yen. The euro rose to $1.0645 from $1.0599. In the last few weeks the dollar has reached a 13-year high compared to other currencies. A strong dollar hurts profits and sales for companies that do a lot of business overseas, and the technology companies on the S&P 500 get almost 60 percent of their revenue outside the U.S.
Oil prices rallied again and reached their highest level since mid-October. Benchmark U.S. crude picked up $1.62, or 3.3 percent, to close at $51.06 a barrel in New York. Brent crude, the standard for pricing international oils, added $2.10, or 4.1 percent, to $53.94 a barrel in London. Chevron gained $1.73, or 1.6 percent, to $113.29 and Phillips 66 rose $1.90, or 2.3 percent, to $84.98.