What happened

It's the first Monday in June, trading is back in full swing after a holiday-shortened week, and stock markets are glowing a modest shade of green, with the S&P 500 up a healthy 0.5% in midday trading.

Industrial stocks, in particular, are getting a nice boost, with shares of Boeing (NYSE:BA) up 3.5%, Boeing airplane parts supplier Spirit AeroSystems (NYSE:SPR) doing even better -- up 9.7% -- and Harley-Davidson (NYSE:HOG) riding 7% higher as of 2:15 p.m. EDT.

But why?

Three colorful arrows racing straight up on a black background.

Image source: Getty Images.

So what

Boeing and Spirit AeroSystems are both companies tied to the fortunes of the airline industry, but Harley-Davidson isn't, which tells you right away that this is not an airlines story, or at least not just an airlines story. Airline travel did improve over the Memorial Day weekend last week, but it remains far below historical levels.

Two other data points better explain why industrial stocks of all stripes are benefiting today. First and foremost, the Institute for Supply Management reported today that manufacturing activity in May improved off its 11-year April low to an indexed level of "43.1." Now, without context, that number probably doesn't mean much, but what it's basically telling us is that manufacturing activity in the U.S. is still declining (any figure below 50 indicates a decline) -- but declining less steeply than the "41.5" level it hit in April.

That's one positive for manufacturing companies.

Now here's another positive: On Friday, when President Trump announced the sanctions he would impose on China for tightening its control over Hong Kong and for China's role in spreading the coronavirus worldwide, the president discussed curtailing trade and travel privileges for persons and companies located in Hong Kong. What he did not do, however, was announce a cancellation of the Phase 1 trade deal struck with China in January or announce any new tariffs on Chinese goods.

Now what

While this might sound like a "thank heaven for small blessings" moment, what that basically means to investors is that although the president struck back at China, he did not make a move likely to restart the tit-for-tat series of trade sanctions that characterized earlier trade wars maneuvers with the Middle Kingdom. He did not give China a reason to levy new restrictions on the export of Boeing airplanes and Harley-Davidson motorcycles to China (although China did say it might suspend large imports of U.S. soybeans).

Combined with the moderating effect of the industrial slowdown here in the U.S., investors seem to think that even this is reason enough for a modest stock rally in industrial shares today.