Good News and Bad News

By Alex Eule |  Monday, May 3 Good News/Bad News. The economic data arriving in recent weeks has been so positive — from GDP growth to falling jobless claims to surging personal income and spending — that any slip-up merits extra attention. And a key manufacturing report out Monday fits the bill: The manufacturing index from the Institute for Supply Management remains in expansion territory but this morning's 60.7 level missed economists' forecast by a wide margin, and it was down from last month's 64.7 reading.  The report offers fodder for anyone worried about the long-term implications of rising prices from shortages and a Fed-fueled money boom. "Recent record-long lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products are continuing to affect all segments of the manufacturing economy," the ISM said in its report.  For now, the overall manufacturing expansion — and a continued wave of strong earnings — were still enough to help push the S&P 500 higher. The large-cap index rose 0.3% today, to close at its second-highest level ever. The Federal Reserve tried to tamp down worry about inflation last week, but continued evidence of shortages and rising prices could eventually undermine those assurances. "Investors should bear in mind, however, the fact that supply chain and labor constraints are headwinds that might hold back an even bigger recovery, Barron's Lisa Beilfuss wrote today.

 

DJIA: +0.70% to 34,113.23 S&P 500: +0.27% to 4192.66 Nasdaq: -0.48% to 13,895.12 The Hot Stock: Baker Hughes +8.0% The Biggest Loser: Estee Lauder -7.9% Best Sector: Energy +2.8% Worst Sector: Real Estate -0.5%