An up-and-down day has two of three major U.S. stock indices in negative territory at 2:30 p.m. EDT, with the Dow Jones Industrial Average (DJINDICES:^DJI) down 28 points. Twenty-two of the blue-chip index's 30 stocks have tumbled into the red, with Big Oil's ExxonMobil (NYSE:XOM) down nearly 1% despite signs of optimism in the company's earnings report. Let's catch up on what you need to know.
Manufacturing growth churns higher
The Institute for Supply Management kicked things off today with the April purchasing managers' report. Although U.S. gross domestic product growth barely inched up through the first quarter, America's manufacturing sector looks as strong as ever. Last month's PMI moved higher to a reading of 54.9%, nearly 5 percentage points above the neutral 50 mark that indicates neither expansion nor contraction in U.S. manufacturing. It's the 11th-straight month of growth in this cyclical sector that has been hit hard by the recession and the slow global comeback.
However, the report offered some causes for concern in the long term. New manufacturing orders continued expanding at a rapid clip in scoring a 55.1%, but failed to increase its rate of growth for the month. Growth also slowed in order backlogs, prices, and production, all pivotal areas for U.S. manufacturers planning ahead. While most indices still appear on a strong path in manufacturing, keep an eye on whether growth can pick up steam again and jump higher in May -- particularly as global PMIs have continued to disappoint, with China's own index barely clinging to growth last month with a reading of 50.4%.
The ISM's strong April report came despite American construction project outlays gaining just 0.2% in March, far below the 0.6% growth that economists on average had projected. This was due in large part to a 6.6% drop in outlays for public residential construction. The housing market has been a big driver behind manufacturing's bounce back; indeed, leading manufacturing equipment maker Caterpillar's (NYSE:CAT) recent upbeat earnings report came largely from a 20% year-over-year gain in sales from its construction equipment division. While the manufacturing stock has lost about 0.3% today, Caterpillar's shares have surged by more than 17% year to date and have brushed aside the market's uncertainty in 2014. However, in order for the stock of this industrial giant to continue its run, Caterpillar -- which continues to see its mining equipment sales struggle -- will need construction growth around the world to keep rising.
Elsewhere on the Dow today, ExxonMobil's beat Wall Street's bottom-line estimates with a $2.10 per share net profit result for its most recent quarter. However, that was down from $2.12 a year ago, and revenue slid to miss analyst expectations for the quarter as Exxon continues to deal with declining production. Natural-gas production in particular plummeted more than 9% during the quarter. However, Exxon investors can find hope in the company's upstream business, where earnings picked up by 11% year over year. However, with the current domestic boom in energy, it doesn't seem likely that prices will pick up in any dramatic fashion in the near future -- and that's likely to keep the pressure on Exxon's performance in the coming quarters. This world energy leader with a manageable 2.5% dividend remains a fantastic stock for the long run, but don't expect a growth maven out of Exxon's stock.
3 stock picks to ride America's energy bonanza
Record oil and natural gas production is revolutionizing the United States' energy position. Finding the right plays while historic amounts of capital expenditures are flooding the industry will pad your investment nest egg. For this reason, the Motley Fool is offering a look at three energy companies using a small IRS "loophole" to help line investor pockets. Learn this strategy, and the energy companies taking advantage, in our special report "The IRS Is Daring You To Make This Energy Investment." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free.
Dan Carroll has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.