We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties. You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies. In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
3 Sector ETFs Looks Decent Despite Soft Manufacturing Data
Read MoreHide Full Article
The ISM Manufacturing PMI in the United States declined to 50.2 in October of 2022 from 50.9 in September, beating market forecasts of 50.0 by a whisker. The reading marked the weakest growth in factory activity since mid-2020.
New orders shrank less (49.2 vs 47.1) and employment was little changed (50 vs 48.7) while backlogs of orders fell (45.3 vs 50.9). Companies are continuing to manage head counts through hiring freezes and attrition to lower levels, with medium- and long-term demand still dubious.
Meanwhile, price pressures continued to ease for seven months in a row and fell into contraction zone (46.6 vs 51.7), which should entice buyers. Also, production rose faster (52.3 vs 50.6). "With panelists reporting softening new order rates over the previous five months, the October index reading reflects companies’ preparing for potential future lower demand", Timothy Fiore, chair of the ISM said, per ismworld.org.
“Manufacturing expanded for the 28th straight month. Panelists' companies slowed hiring activity; month-over-month supplier delivery performance was the best since December 2019; prices growth slowed notably (with the index at 60 percent or lower) for the third consecutive month; and lead times continue to ease for capital equipment and production materials. Markedly absent from panelists’ comments was any large-scale mentioning of layoffs; this indicates companies are confident of near-term demand, so primary goals are managing medium-term head counts and supply chain inventories,” said Fiore.
The business for plastics and rubber products is still strong. In fact, raw materials are becoming more available with some raw materials prices even registering a declining trend.
The underlying Russell 1000 Basic Materials RIC 22.5/45 Capped Gross Index measures the performance of the basic materials sector of the U.S. equity market. The fund charges 39 bps in fees.
Almost all suppliers are experiencing lead times growth. The underlying Dynamic Food & Beverage Intellidex Index is comprised of stocks of 30 U.S. food and beverage companies. These are companies that are principally engaged in the manufacture, sale or distribution of food and beverage products, agricultural products and products related to the development of new food technologies. The fund charges 63 bps in fees.
Survey for Miscellaneous Manufacturing revealed that quotes and orders are still strong though the industry players are not able to accept any new orders for shipment due to motor and electronic component shortages.
Business condition continues to be strong for Electrical Equipment, Appliances & Components industry. Some commodities within the supply chain are starting to stabilize, while others including Electrical and wiring components are still causing disruption for production.
The underlying Industrial Select Sector Index includes companies from the following industries: industrial conglomerates; aerospace & defense; machinery; air freight & logistics; road & rail; commercial services & supplies; electrical equipment; construction & engineering; building products; airlines; and trading companies & distributors. The fund charges 10 bps in fees.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
3 Sector ETFs Looks Decent Despite Soft Manufacturing Data
The ISM Manufacturing PMI in the United States declined to 50.2 in October of 2022 from 50.9 in September, beating market forecasts of 50.0 by a whisker. The reading marked the weakest growth in factory activity since mid-2020.
New orders shrank less (49.2 vs 47.1) and employment was little changed (50 vs 48.7) while backlogs of orders fell (45.3 vs 50.9). Companies are continuing to manage head counts through hiring freezes and attrition to lower levels, with medium- and long-term demand still dubious.
Meanwhile, price pressures continued to ease for seven months in a row and fell into contraction zone (46.6 vs 51.7), which should entice buyers. Also, production rose faster (52.3 vs 50.6). "With panelists reporting softening new order rates over the previous five months, the October index reading reflects companies’ preparing for potential future lower demand", Timothy Fiore, chair of the ISM said, per ismworld.org.
“Manufacturing expanded for the 28th straight month. Panelists' companies slowed hiring activity; month-over-month supplier delivery performance was the best since December 2019; prices growth slowed notably (with the index at 60 percent or lower) for the third consecutive month; and lead times continue to ease for capital equipment and production materials. Markedly absent from panelists’ comments was any large-scale mentioning of layoffs; this indicates companies are confident of near-term demand, so primary goals are managing medium-term head counts and supply chain inventories,” said Fiore.
Sector ETFs in Focus
Chemicals – iShares U.S. Basic Materials ETF (IYM - Free Report)
The business for plastics and rubber products is still strong. In fact, raw materials are becoming more available with some raw materials prices even registering a declining trend.
The underlying Russell 1000 Basic Materials RIC 22.5/45 Capped Gross Index measures the performance of the basic materials sector of the U.S. equity market. The fund charges 39 bps in fees.
Food, Beverage & Tobacco Products – Invesco Dynamic Food & Beverage ETF (PBJ - Free Report)
Almost all suppliers are experiencing lead times growth. The underlying Dynamic Food & Beverage Intellidex Index is comprised of stocks of 30 U.S. food and beverage companies. These are companies that are principally engaged in the manufacture, sale or distribution of food and beverage products, agricultural products and products related to the development of new food technologies. The fund charges 63 bps in fees.
Industrials – Industrial Select Sector SPDR ETF (XLI - Free Report)
Survey for Miscellaneous Manufacturing revealed that quotes and orders are still strong though the industry players are not able to accept any new orders for shipment due to motor and electronic component shortages.
Business condition continues to be strong for Electrical Equipment, Appliances & Components industry. Some commodities within the supply chain are starting to stabilize, while others including Electrical and wiring components are still causing disruption for production.
The underlying Industrial Select Sector Index includes companies from the following industries: industrial conglomerates; aerospace & defense; machinery; air freight & logistics; road & rail; commercial services & supplies; electrical equipment; construction & engineering; building products; airlines; and trading companies & distributors. The fund charges 10 bps in fees.