Please ensure Javascript is enabled for purposes of website accessibility

Why Industrial Stocks Harley-Davidson, Middleby, and Alcoa Surged This Morning

By Rich Smith – Jun 5, 2020 at 1:33PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

An unexpectedly strong jobs report plus New York's second phase of reopening raise investor hopes.

What happened

After taking just a short breather from a week of run-ups yesterday, the S&P 500 came back with a vengeance to close the week on Friday. As of 10:50 a.m. EDT, this broad gauge of the health of the stock market is up more than 2%, with industrial stocks like Harley-Davidson (HOG 3.53%), Middleby (MIDD 1.92%), and Alcoa (AA) leading it higher.

Harley-Davidson is up 3.7%, after posting gains of nearly 8% earlier in the day. Middleby is up 10% (but was up 15%), and Alcoa is hanging onto a 3.9% gain after surging more than 19% higher this morning.

Three colorful arrows racing straight up on a black background

Image source: Getty Images.

So what

What do a motorcycle maker, a manufacturer of commercial kitchen ovens, and an aluminum producer have in common? None of these three stocks has anything of particular note on its news feeds happening today -- no earnings reports, no analyst upgrades, nor even a changed price target. Instead, all three appear to be responding to purely macroeconomic headline news.

This morning, the Bureau of Labor Statistics reported that 2.5 million jobs had been added to U.S. payrolls in the month of May. That's a huge number, made all the more huge in comparison to economists' prediction of a 7.2 million decline in jobs. Additionally, an unemployment rate that was approaching 15% nationally has turned tail and retreated to 13.3%.  

Adding to investors' ebullience, late yesterday New York Mayor Bill de Blasio confirmed that New York City will begin its planned Phase 1 of reopening on Monday, and is on track to reach Phase 2 by early next month.  

Now what

As businesses are permitted to reopen and jobs come back, consumers will have more income to spend on discretionary purchases such as motorcycles and eating out. As restaurants see more business, they'll have money to buy new equipment for their kitchens. And as more ovens, refrigerators, and so on are manufactured, demand for metals such as steel and aluminum will rise.

It will be a long, slow march for the economy to get back to normal, but the first steps have been taken.

Selim Bassoul, former CEO, chairman, and president of Middleby, serves as Chief Innovator at The Motley Fool. Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Middleby. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Alcoa Inc. Stock Quote
Alcoa Inc.
Harley-Davidson, Inc. Stock Quote
Harley-Davidson, Inc.
$36.11 (3.53%) $1.23
The Middleby Corporation Stock Quote
The Middleby Corporation
$130.63 (1.92%) $2.46

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/04/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.