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Wayne Independent - Honesdale, PA
  • Business update: An ugly day on Wall Street

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  • It was ugly today.
    First, the scoreboard:
    Dow: 15,372.8 (-326.0, -2.0%)
    S&P 500: 1,741.8 (-40.7, -2.2%)
    Nasdaq: 3,996.9 (-106.9, -2.6%)
    And now the top stories:
    January’s sell-off spilled into February.
    The ISM manufacturing index dropped to 51.3 in January from 56.5 in December. Economists were looking for a reading of 56.0. The new orders sub-index collapsed to 51.2 from 64.4. For the most part, companies surveyed blamed bad weather. “We can say ignore today’s decline, it is due to inclement weather, but we really have to wait to see if the number bounces back after the weather warms back up in the next few months,” said Bank of Tokyo-Mitsubishi’s Chris Rupkey. “Manufacturing caught a cold this month, keeping our fingers crossed it is not the start of something more serious.”
    However, not everyone was satisfied just blaming the cold. Here’s Morgan Stanley’s Ted Wieseman: “It’s hard to believe that weather was the whole or even most of the story, but it’s not clear what else triggered the suddenly much slower growth these results point to. Domestic demand growth saw some moderation late last year, but that followed very strong growth through most of the second half, and the report didn’t indicate respondents were seeing a worse outlook for domestic activity. EM strains are certainly a risk for the export-oriented manufacturing sector, but the export orders index hasn’t weakened too much so far. It fell from a multi-year high of 59.5 in November to 55.0 in December and 54.5 in January, so some slowing in export growth is indicated, but that’s still well above last year’s low of 51.0 in May or a run of sub- 50 readings during the global trade weakening in 2012. We’ll see in coming months if Bradley Holcomb, who oversees the survey for ISM, ends up being right in predicting that the January ISM results would end up just being a ‘blip.’”
    It’s also worth noting that the ISM index, which is based on a national survey, looked worse than all of the major regional surveys. It’s a strange discrepancy.
    In other disappointing news, January auto sales were weaker than expected. According to Autodata, sales fell to an annualized rate of 15.2 million units. Analysts were looking for 15.7 million. “Anecdotal reports from the main dealers pointed to the possibility of a negative effect from bad weather,” said Peter Newland. “Given similar reports related to this morning’s ISM release we would advise caution before reading too much into signs of a possible slowdown in economic activity. The outcome of Friday’s employment report remains very uncertain on this basis too.”

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