The Institute for Supply Management's manufacturing survey index out Monday jumped to a 13-year high of 60.8 from August's robust 58.8, as the factory sector seemed to get an extra lift from hurricane rebuilding.
XWall Street economists expected the ISM gauge to ease to 58.0. Readings above 50 signal expansion, while those south of 50 suggest contraction.
The new orders index rose to 64.6 from 60.3, while the current production gauge climbed to 62.2 from 61.0. The employment gauge picked up to 60.3 from an already red-hot 59.9.
The 10-year Treasury yield — which ended last week at a 10-week high amid prospects that GOP tax-cut plans could stimulate faster growth and hawkish Federal Reserve policy — were little changed 2.33% after the report. The Dow Jones industrial average, S&P 500 index and Nasdaq composite, which opened with modest gains to fresh record highs, added slightly to gains following release of the ISM.
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The recovery in Treasury yields and rising odds of Fed rate hikes have coincided with investors showing renewed interest in bank stocks. Last week, shares of JPMorgan Chase (JPM) cleared 95.32 buy point, the point at which investors have the greatest chance of seeing further near-term gains. JPMorgan rose 0.3% to 95.81 in the stock market today, hitting a record high.
Morgan Stanley (MS) rose 0.5% to 48.39. Intraday, Morgan Stanley rose as high as 48.70, briefly clearing a 48.59 buy point from a cup-with-handle base.
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September's jobs report headlines this week's economic data, but hurricanes, including Hurricane Maria that knocked out power for most of Puerto Rico, may not provide clear signals. Jefferies economists expect the report to show that payrolls shrank 45,000 last months due to hurricanes, while the Wall Street consensus expectation is a rise of 75,000, well short of the average 185,000 gains over the past three months.
After a hit to economic activity in the third quarter, rebuilding from the hurricanes is expected to provide a lift to GDP in Q4.
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