ISM new orders crater

Jason Goepfert

2020-05-01

The ISM New Orders index plunged to one of the lowest levels ever. By the time there was such little activity in the past, though, future long-term returns in stocks were very good.

Factory activity has ground to a halt, and one of the biggest reflections of the lack of activity is the massive decline in new orders.

But it could be so bad that it's good, as ISM notes, per Marketwatch:

"Timothy Fiore, chair of the ISM manufacturing business survey committee, said the worst might be behind the manufacturing sector. He said the bottom hadn’t been reached but “we can see it.” There would be 4-6 more weeks of decline, but not at the rate seen so far, as uncertainty is ebbing, Fiore told reporters."

It looks like Mr. Fiore might have a point.

While such tepid activity led to mixed short- to medium-term returns, a year later the S&P 500 was higher every time by an average of more than 22%.

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