“Super bullish,” Goldman Sachs analyst Joe Ritchie told Yahoo Finance when asked to sum up the vibe at the two-day event in New York City. “We are at the start of a very significant infrastructure build in the U.S. Some might call it a U.S. manufacturing renaissance.”
Several big catalysts are on the horizon for the industrials patch, people at the event told Yahoo! Finance.
The first is unprecedented investment by the government in the form of the new Inflation Reduction Act (IRA). And the other are re-shoring initiatives — notably the Chips and Science Act — that are targeted to boost domestic output by strengthening the labor market.
These factors appear to already be driving a rebound in the fortunes of industrials in the second quarter.
“Demand from our larger customers is picking up,” Clean Harbors (CLH) co-CEO Michael Battles told us. Clean Harbors is a waste management firm that services the majority of the Fortune 500.
Added Battles: “They’re doing more production in North America… and we’re seeing that volume come into our network.”
The CEO of truck broker RXO (RXO) Drew Wilkerson sees a similar type of demand bounce unfolding.
“It’s a tough macroeconomic environment right now. … But there are reasons for optimism in the back half of the year,” Wilkerson said.
Trucks hauling shipping containers drive in Boston, Friday, March 17, 2023. (AP Photo/Michael Dwyer)
Wilkerson added: “Retail and e-commerce customers are talking about how their inventory is restocked and we have to get orders out to the end consumers.”
These green shoots come as the U.S. economy is fresh off meager 1.1% annualized Gross Domestic Product (GDP) growth in the first quarter. In 2022, GDP expanded 2.1%.
If you take a look at the price action in the industrial complex, some investors have begun to position for the no-recession scenario. The emphasis being on some investors.
Year to date, Clean Harbors stock has soared 22% on the back of a string of solid quarterly results, while RXO is up a not-too-shabby 11%.
And after four consecutive weeks of outflows, the industrial sector recorded its first inflows in more than a month according to new data out of Bank of America.
The closely watched Dow Transportation Average (^DJT) tells a little different story, however.
The transportation gauge — which is viewed by many as a leading indicator for the state of the U.S. economy given the 20-stock index is comprised of airline, trucking, railroad and delivery stocks — has underperformed the broader market over the past six months amid slowing economic growth and recession fears. It has tanked more than 5% compared to the Dow Jones Industrial Average’s drop of nearly 2%.
Big-name industrials such as Caterpillar (CAT) and John Deere (DE) are each down by more than 10% in the past six months.
But if you’re willing to brush those warning signs aside and bet on an under-the-radar industrial renaissance, there are opportunities.
Go with industrial powerhouses that play in smart infrastructure such as Johnson Controls (JCI), Goldman’s Ritchie says.
He makes the case that supply chain pressures are easing, and it’s having a “really powerful impact on growth.”
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
