Big picture: The ISM index is painting a grim picture of the manufacturing sector, said Sam Bullard, senior economist at Wells Fargo, in a note prior to the release of the data.
He noted the ISM factory index has been in contraction territory for 22 of the past 23 months.
Uncertainty over the regulatory, fiscal and trade policy is holding down activity, and this will persist into 2025, said Richard Moody, chief economist at Regions Financial Corp.
The Federal Reserve’s recent half percentage point interest rate cut may help, but not until new projects are started in the first quarter, according to a source in the fabricated metals industry.
What ISM said: The strike by dockworkers at ports from Maine to Texas was “scary” because of the sweeping impact it could have on manufacturing and needed to be resolved quickly, said Timothy Fiore, chair of the ISM’s manufacturing survey committee.
Looking ahead: “Overall, the story here remains the same: manufacturing sentiment is soft, with monetary policy still restrictive and elevated trade policy uncertainty that will depend on the outcome of the Presidential election. Hurricane-related worries could also be depressing sentiment,” said Ali Jaffery, economist at CIBC Economics.
Market reaction: Stocks DJIA SPX opened lower on Tuesday while the 10-year Treasury yield BX:TMUBMUSD10Y was down to 3.719% in early morning trading.