This morning reading of 54.7% for the ISM Index was much stronger than expected as economists were looking for a reading of 50.5%. Today's number helps confirm on a much broader national scale yesterday's higher than expected Chicago PMI data and that the nations factories are seeing a pickup in activity.
Economists are still uncertain of just what type of impact these numbers currently have on the longer-term prospects of a recovery. Will they continue to hold these levels or trend higher still? Or is the sharp rebound simply due to the replenishing of inventories that were sharply reduced due to production cutbacks in the last quarter of 2001 due to the terrorist attacks of September 11th?
Nobody knows for sure, but today's strong ISM number has the broader stock market responding as investors gobble up stocks.
Sectors strength standout today is the Semiconductor Index (SOX.X) 541 +6% after an amazingly bullish call and upward revisions on earnings for Micron Technology (NYSE:MU) $35.23 +9.61% by Thomas Weisel Partners. TWP believes contract prices for MU are firm and starting to show robust growth. TWP sharply adjusted earnings estimates higher and thinks MU will lose just $-0.04 a share instead of $-0.15 a share in the current quarter, but then revised 2002 earnings to a gain of $1.55 a share from previous estimates for a loss of $-0.05 a share. TWP also raised estimates for 2003 to $4.00 a share from $1.35.
This morning's rally looks to have some "umph" as broader market bullishness prevails. Other sector showing strength are software as depicted by the GSTI Software Index (GSO.X) 159 +3.8%, Internet (INX.X) 109 +3.7% and Fiber Optice (FOP.X) 84.2 +3.8%.
Sector weakness is limited with Biotech (BTK.X) 469 -1.9% and Gold/Silver (XAU.X) 64.67 -0.78 the only sectors I see in the red. Biotech weakness found in shares of Invitrogen (NASDAQ:IVGN) $32.46 -28%, Protein Design Labs (NASDAQ:PDLI) $14.55 -8%, Affymetrix (NASDAQ:AFFX) $22.94 -6.8%, and Cephalon (NASDAQ:CEPH) $56.18 -2.12%.