US equity markets gained some ground yesterday – after several sessions of weak performance. The S&P 500 (1.06%), Dow Industrials (0.95%) and NASDAQ (0.93%) all saw positive price action throughout the trading session. Volume however was lighter than Monday’s with the NYSE (-11.02%) and NASDAQ (11.36%) both experiencing slower share turner over.
All major market sectors of the Dow Industrials gained ground on the session with Health Care (+2.31%) and Financials (+1.24%) leading the way. Even the Energy sector (+0.80%) gained ground for a change.
Thematically speaking economic data and retail sales drove the narrative.
Total Vehicle Sales (18.2 M) for November came in stronger than consensus expectations (18.1 M). A year ago, the rate of sales was closer to 17.2 annualized. Ford (+.4%), General Motors (2.0%) and Fiat/Chrysler (3.0%) all reported gains. However, the largest takeaway from the Vehicle Sales data was Volkswagen’s (-25.0%) sales plunge for the period. Volkswagen’s enormous drop in sales was not entirely unexpected given the news out on the car maker in recent weeks focused on emission ratings tampering. Strength in trucks and crossovers provided significant growth to top and bottom line for U.S. manufacturers.
The data point that ruled the day yesterday was the ISM Manufacturing Index. Just as a refresher, the ISM Mfg. Index is a composite index calculated from five of the eleven sub-components of a monthly survey of purchasing managers. For the month of November it came in at 48.6 versus consensus expectations of 50.5. Not only was it clearly a “miss”, it was also the worst reading in over six months and effectively reintroduced the framework of “contraction” into the economic landscape. The release had a dampening impact on U.S. equity market price performance in the early going and also acted to dampen what otherwise would have been a robust day of trading in European markets. Construction Spending M/M change of 1.0% was significantly stronger than consensus expectations which were calling for a more moderate 0.6% gain in the period. Net/net, investors looked past the ISM Manufacturing miss and re-engaged equities.