Stocks sank across the board on Monday, though they remained within the same narrow band they have occupied for the past week. Early gains fueled by optimism over Chinese manufacturing data were wiped out by weak U.S. factory data and the lack of progress on fiscal cliff talks.
Click to Enlarge Nine of the 10 S&P 500 sectors were lower, with telecom the only group recording any gains. The worst performers were materials producers including chemical companies like Dupont (NYSE:DD), and also the industrials. Investors suspect the weakness had more to do with a cutback in capital expenditures than Superstorm Sandy.
Indeed, the November ISM Manufacturing Index data actually brought about a change in the narrative. The manufacturing readout hit a low not seen since July 2009, at the tail end of that year’s recession, with specific weakness in employment, inventories and prices paid.
U.S. tech stocks were mildly interesting. Dell (NASDAQ:DELL), which was once the king of the stock market and has since become an afterthought, rose 4.4% after Goldman Sachs (NYSE:GS) upgraded it to “buy” from “sell.”
Click to Enlarge I agree that Dell is worth a lot more than it is selling for, though I am challenged to determine what the catalyst to unlock the value might be. Analysts at RBC suggested that a catalyst might be a special dividend, but really that’s just a one-time trick. I’ll pass for now, but it’s on the radar as its intrinsic value is well ahead of the current price.
Jon Markman writes a daily swing trading newsletter, Trader’s Advantage. He uses a combination of fundamental and technical analysis to identify which stocks will move quickly.
He is also launching an exciting new service that profits from market volatility later this month.