Ya gotta love this e-mail from CNNMoney.com:
So what level has did the Dow reach, O friendly CNN e-mailer?
Could it possibly have been a nice round number? Like, say, 14000? You wouldn't want readers to pick up any unwarranted optimism, would you?
Both the NASDAQ and S&P closed near or above roughly 6-year highs.
If the stock market is a leading indicator, as it's generally considered, it appears to be "leading" to good things, press gloom and doom notwithstanding. I personally don't believe that the prospect of another rate cut is as important as the fact that the economy's fundamentals are still pretty strong. The Institute for Supply Management's (ISM's) Manufacturing Index for September was in expansion mode yet again, though at 52.0, it came in slightly lower than last month's 52.9 (go to middle of post).
Overall take. This report shouts, “Moderate growth.” Production (54.6) grew moderately. Orders (53.4) grew moderately. Exports (54.5) grew moderately. Imports (53.0) grew moderately. Even employment (51.7, +0.4) is expanding—in contrast to the Labor Department’s count of manufacturing payrolls. Despite fears and even a few recession calls, this economy is still making good headway. The ISM says that the reading of 52.0 is consistent with 3.1% GDP growth. Right now, most people—me included--would be very happy with this level of performance.
..... What goes down must come up. Inventories are running very lean. The inventory component of this survey plunged to 41.6, a fall-off of 3.8 points. And this account for 0.4 points of the overall decline in the index. But in the end, this will be a good thing, as these goods will need to be restocked, requiring future production increases. That’s like money in the bank.
It looks like investors agree.
Cross-posted at BizzyBlog.com.