The headlines out of Wall Street yesterday mostly focused on some variation of "Stocks surge on manufacturing growth." There's some truth to that, but it doesn't tell the whole story. Wall Street analysts expected yesterday's manufacturing report to be solid, but it ended up outperforming the estimates.
Economists surveyed by Bloomberg News forecast that the Institute for Supply Management's factory index would fall from July's figure of 55.5 to 52.8 in August. That's still in positive territory, considering that any number above 50 is supposed to signal growth in manufacturing. Instead, the August number came in at 56.3, an unexpected increase. That's probably why, on an unusually strong day where the Dow posted its biggest gains in almost two months, the strongest sector was the manufacturing group.
Remember, it's not so much good news that boosts stocks as news that exceeds what the Street is already expecting. With manufacturing leading the way, all ten of the S&P 500's sectors were up by at least 1.6 percent, making the first of September a very good day for the market.
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