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Last week was a tough stretch for the US stock market in which the S&P 500 shed 1.7% of its value, its biggest weekly drop since August. This week has got off to a bright start with today’s trading, however, with stocks rebounding sharply on Wall Street.
Although caution will still be in the air until we’ve heard the outcome of the FOMC meeting, there have been plenty of signals showing the US economy is faring well.
Data for the manufacturing sector continues to be ambiguous, with today’s Empire State manufacturing survey coming in at a level of 0.98 for December, showing a decline in business conditions since last month, and undershooting the consensus estimate of analysts polled by Reuters. With the forward-looking new orders component falling in to negative territory, this report suggests there could be some headwind for the manufacturing sector in the New York area.
Nationally, things look a bit rosier, though, according to two other reports today.
Markit’s manufacturing PMI for December nudged up to 54.4 from November’s mid-month reading of 54.3 (the final reading in November was 54.7). The employment component of the index showed significant improvement, but new orders slowed to a level of 54.5. While this is still a solid level, implying expansion, it is down a significant amount from November’s 56.2.
Industrial production jumped 1.1% in November, from October’s upwardly-revised change of 0.1%. The manufacturing component of this report increased by 0.6%, while capacity utilisation climbed from 78.2% to 79.0%.
Despite the slowing suggest by the Empire State survey, today’s reports overall point to improvement in the manufacturing sector, but it remains to be seen whether this will be enough to sway the Fed towards a taper with inflation still so sluggish.
The strength of the industrial production report has boosted the price of crude today, with US light crude oil futures surging 1.2% to $97.70 a barrel.