Stocks posted their worst showing last week in eight months. The action was dreadful with all sectors and market segments being clipped. Small caps fared the worst, dropping anywhere from 5 to more than 6 percent, depending the on the average you choose to examine. Market breadth was equally terrible with declining issues outpacing advancers by more than a 7-to-1 margin on the New York Stock Exchange. Markets around the globe responded in kind.
Yesterday it looked like U.S. shares were headed for at least a temporary respite. But the rally was all too brief. Blue chip shares managed to recover by the end of yesterday’s trading, but there were plenty of divergences: small caps, the transports and utilities all lost ground.
Initially, investors cheered the Institute of Supply Management’s (ISM) Manufacturing Index data of October, which came in at 55.7, well ahead of expectations at 53 and the prior reading of 52.6. But the devil was in the details.
The stock market rally fizzled as a breakdown of the ISM data revealed the pace of new orders, supplier deliveries and customers’ inventories all slowed in the month, while prices paid rose.
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