Here's Today's Key Takeaway For Equity Investors
Enviado: 5/8/2003 10:47TradingMarkets.com
Here's Today's Key Takeaway For Equity Investors
Monday August 4, 7:10 pm ET
By Edward Allen
Although today's favorable factory order data was already priced into the financial markets--the report uses data from last week's durable goods orders data--it nevertheless confirms that the positive economic fundamentals remain in place. The data is a positive confirmation for equity investors since rising orders, to a large extent, signal an improvement in business spending, which, in turn, reflects better profit expectations on the part of businesses.
To be specific, new orders for manufactured goods increased by $5.5 billion or 1.7% in June to $326 billion. More importantly though, non-defense orders--which are a fairly good barometer for business outlook-- rose by 1.5% for a third month in four.
As can be seen in the chart below, the strong historical correlation between the S&P 500 (CBOE^SPXNews) and factory orders is due to the fact that businesses typically pick up their spending in anticipation of improving demand and therefore profits.
Ed Allen
Here's Today's Key Takeaway For Equity Investors
Monday August 4, 7:10 pm ET
By Edward Allen
Although today's favorable factory order data was already priced into the financial markets--the report uses data from last week's durable goods orders data--it nevertheless confirms that the positive economic fundamentals remain in place. The data is a positive confirmation for equity investors since rising orders, to a large extent, signal an improvement in business spending, which, in turn, reflects better profit expectations on the part of businesses.
To be specific, new orders for manufactured goods increased by $5.5 billion or 1.7% in June to $326 billion. More importantly though, non-defense orders--which are a fairly good barometer for business outlook-- rose by 1.5% for a third month in four.
As can be seen in the chart below, the strong historical correlation between the S&P 500 (CBOE^SPXNews) and factory orders is due to the fact that businesses typically pick up their spending in anticipation of improving demand and therefore profits.
Ed Allen