Stocks set record as economy reaccelerates

A surge in global manufacturing activity sends the S&P 500 above 1,700 for the first time.

By Anthony Mirhaydari Aug 1, 2013 2:12PM

copyright Photodisc, SuperStockAfter a lot of hand wringing over the future of the Federal Reserve's cheap money stimulus over the last few months, stocks are once again pushing to new record highs. And they're doing it because of solid, tangible, fundamental reasons: The economy is revving up.


Manufacturing activity data released over the last 24 hours confirms this. The U.S. ISM Manufacturing Index improved to its best level in more than two years on a surge of new orders. Production improved more than 11.5 points to 65, indicating the strongest month-over-month expansion since the recovery started. Any reading over 50 indicates growth.


And it's not just happening here, but overseas as well.


China's manufacturing sector unexpectedly returned to growth last month, suggesting the recent slowdown in the Middle Kingdom (as illicit lending practices are cracked down on) is reversing. The Chinese State Council announced Wednesday night that it would allow growth in China to slow to an unreasonable level as it works to reorient the country away from fixed-asset investment towards domestic consumption.



Japan's economy enjoyed its fifth month of manufacturing activity expansion as new orders continue to grow thanks to a cheaper yen -- which is boosting export competitiveness.



But the biggest turnaround is what is happening in the eurozone. Europe's manufacturing sector has been contracting since late 2011, throwing countries like Spain into recession as budget austerity and financial turmoil took its took on the currency union. But lower sovereign borrowing costs, a stabilization in the bond market, and renewed vigor has pushed the eurozone's Manufacturing PMI back into expansionary territory.



Even Greece, the economic basket case that it is, is on the mend. The Markit Greece Manufacturing PMI is rebounding, though still in contractionary territory. Employment and new orders are contracting at their slowest pace since January 2010.


While there are concerns on the horizon, such as the looming fiscal fight in Washington, for now, the next milestone that's set to be crossed is Dow 16,000.


I'm looking for beleaguered, economically sensitive steel stocks like Cliffs Natural Resources (CLF) to be the biggest beneficiaries of all this.


And a ramp up in global factory activity should soon translate into firmer industrial commodity prices, higher inflation, and some support for gold and silver as bond-market derived inflation expectations pop to their highest level since early 2012 as crude oil makes another run at the $110 a barrel level.


Check out Anthony's new investment newsletter, the Edge, and his money management service, Mirhaydari Capital Management. A two-week free trial has been extended to MSN Money readers. Click the link above to sign up. Mirhaydari can be contacted at anthony@edgeletter.c​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​om​​​​​​​​​​​​​​​​ and followed on Twitter at @EdgeLetter. You can view his current stock picks here. Feel free to comment below.

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Aug 1, 2013 3:32PM

Oil prices make run at $110 a barrel and you act like this is a good thing. This is a RICH MANS country and they could care less about the economy of working Americans.





Aug 1, 2013 2:54PM
The really good news now Anthony is that the Fed can taper without the market plunging.......... Right ? ......... you friggin idiot.
Aug 1, 2013 4:00PM
And tomorrows headlines will read..."Economy RAN OUT of gas".
Aug 1, 2013 3:11PM
It is just so ridiculous for these writers to spin articles like this and then just the hint of the Fed tapering and the market sinks. QE and Bennie are the market. If you don't believe that then please explain why the Fed can't make any move............... he11 write bennie and tell him to have more faith in how well the USA has recovered and shut QE down....  It is just a lie.
Aug 1, 2013 3:59PM
Oil Speculation on Wall Street is at an all time high and the American Consumers are the ones who are paying for it. It is time to crack down on excessive speculation in oil futures trading on Wall Street. It seems like the average worker in this country is no longer working to support and feed his family as he is working to make Wall Street, Big Oil and the Big Banks Richer. There is absolutely no justification for oil prices being so high except Greed and somebody in Congress has got to stand up to Wall Street for the working and poor people in our country.
Aug 1, 2013 3:56PM

Why yes, I just went outside and tripped over a pile 'o money.  It's just everywhere.

Aug 1, 2013 2:57PM
There is nothing tangible about this economy, where we are at in the scheme of things and prospects for future survival after WWIII. You've got nothing here. The most accessible President in history isn't, and Congress has two options ahead: retire and get beaten to death by crowbars or run again and get beaten to death by crowbars. Any idiot could and would have generated more recovery & opportunity dropping $85 billion a month from an airplane flying across America. Every business platform is totally incapable of functioning like an enterprise and is filled with alumni who can't feed themselves or live a normal life without psychopathy pursuits. Close the banks, end the Federal Reserve and get RID of Wall Street.  
Aug 1, 2013 3:55PM
Stop the Fed Pumping of Billion's if the economy is so great. Wait...what would the wallstreet fatcats do than?  Retire with all thet Bernanke money?
Aug 1, 2013 3:05PM

I think the market could have shown some growth this year, but the S and P 500 up 19.6%. What was the term…oh yes…irrational exuberance.


I kept a conservative amount in the game, so "yee haw ridem cowboy" I assume. 

Aug 1, 2013 3:00PM

"After a lot of hand wringing over the future of the Federal Reserve's cheap money stimulus over the last few months"


You misread the gesture. That wasn't hand-wringing. That was 83% of America shaking their fists at Bernanke as he pompously manipulated our existence for yet another month. The other 17% couldn't care less because they're directly connected to the printing presses and get theirs by Osmosis. We're headed for a war over fake money printing. Could anything be more ridiculous.  

Aug 1, 2013 4:25PM
Nice try msnbc. You''ll convince the wiling idiot but not the millions out of work or who have quit looking.

Anthony? Solid, tangible, fundamental reasons? Last month you said these were not even in sight, and today, this?

First Jubak and deflation, now you...Do the writers just grab story headlines out of a hat?

Aug 1, 2013 3:59PM
This freakin gas up .40 in one White House can you see  where we the country could benefit from the XL pipeline????  Yea, they don't care about us peasants.
Aug 1, 2013 4:07PM

Can you think of another profession where you get paid for spinning  jargon-filled nonsense without any accountability?

You would be better off turning to your own crystal ball to find out what to do with your money. Reading AM's predictions you can make money only if you do not do what he says. What a joke.

Aug 1, 2013 4:49PM
Reading all the pessimism and doom/gloom on this thread makes me downright giddy that this market still has room to run.  Why all the sour-pusses?  Did you panic like a little girl and sell at the bottom?  Was your **** too puckered up when the markets were a screaming buy?
Aug 1, 2013 4:11PM
Aug 1, 2013 3:59PM

And it hits the brakes just as

Once Wall Street takes money from the investors..

they hit the sale button and steal their profits...

Then come back the next day to play the same game..

Aug 1, 2013 3:48PM
avatar money courtesy of the how are all these companies doing? great?..must be hiring like crazy....everyones getting jobs again!....woohoo!
Aug 1, 2013 3:55PM
The global economy is doing well while Obamaville prints fake money just to hang on
Aug 1, 2013 4:32PM
Nothing in Europe has been solved.  The ECB is just injecting a bunch of cash to paper over the problems.  Sound familiar?  The BOJ is doing the same thing in Japan, and have been for awhile.  Sound familiar?  Of course Bernanke is doing the same thing over here.

How quickly we forget - we haven't come close to the 2% GDP growth mark in any of the last 3 quarters.  The employment picture is still very bleak, not only because the U6 remains high, but because of the type of jobs that are being created - part time, low-paying, etc...  And lest we forget, the markets dropped about 5% back in June when Bernanke dare even mention that at some point in the future, he just might have to consider possibly tapering QE.
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