Monday April 3, 10:13 am Eastern Time
(Note: this article is ``in progress'; there will likely be an update soon.)
INSTANT VIEW - March NAPM drowned out by
Microsoft
NEW YORK, April 3 (Reuters) - A reading of U.S. manufacturing activity last month came
in below expectations, but the news drew little attention as investors were primarily focused
on Microsft Corp.'s breakdown of settlement talks with the U.S. governement.
The National Association of Purchasing Management manufacturing activity index was 55.8
in March, versus 56.9 in February. A Reuters poll of U.S. economists found that, on
average, the March NAPM index was expected to read 56.9, unchanged from February.
A number above 50 indicates economic expansion.
The following are financial market strategists' view on the data.
CHRIS DICKERSON, ANALYST, GLOBAL MARKET STRATEGISTS INC., GAINESVILLE, GA.:
-- ``That's a good number. ... (Stocks) are not going to react to it at all. They are totally focused on Microsoft.'
BILL MEEHAN, CHIEF MARKET ANALYST AT CANTOR FITZGERALD
-- ``I guess the focus is on the jump in prices index from 74.1 to 79.8. We saw a similar jump in the Chicago purchasing report
that came out last week. The focus is going to be more on the pricing component, but in terms of the manufacturing activity
index, anything above 55 shows expansion...What we are likely to see is a further rotation out of technology stocks and into the
Old Economy stocks.'
LARRY RICE, CHIEF INVESTMENT OFFICER, JOSEPHTHAL LYON & ROSS
-- ``It just confirms that we are going to get an increase (in interest rates by the Federal Reserve Bank) next month. The real
question is whether its a quarter or a half a point (incease). Price are going up. People are seeing it out there and it just hasn't
worked its way through the system, but I think it's beginning to now.'
CHRISTOPHER LOW, CHIEF ECONOMIST, FIRST TENNESSEE CAPITAL MARKETS, NEW YORK
-- "The NAPM level is still consistent with growth. (But) it's not runaway growth...It does support a May rate hike.
The key is that oil prices have come down a lot. With the OPEC agreement (in an output increase), the market could look
beyond the price index."
KEVIN FLANAGAN, FIXED-INCOME STRATEGIST AT MORGAN STANLEY DEAN WITTER:
-- "On the surface it would appear as if the pullback in manufacturing activity could be viewed as a friendly development,
however, it's the prices-paid component that will probably put a lid on any enthusiasm that could come from the decline in the
overall index.
``The (data) while perhaps showing some retrenchment in manufacturing activity, nevertheless reveals that there are price
pressures perhaps building in the pipeline. I think right now it keeps the Fed on their toes and does not dissuade at all the
argument that they would consider tightening again in May.' |
