Chicago PMI Index Falls Into Recessionary Territory

By Minyanville Staff  SEP 28, 2012 4:34 PM

Today's financial recap and tomorrow's financial outlook.


After bouncing back from short-term oversold conditions, stocks opened lower and held around the important SPX 1436 mark. The economic data in the morning showed no big change month-to-month, but the consumer data was the third estimate of such data, with very little change expected. However, the Chicago Purchasing Manager's Index fell to 49.7 -- recessionary territory -- for the first time since late 2009, signalling that economic conditions continue to worsen in the US.

In Spain, the auditing firm Oliver Wyman released stress tests that showed Spanish banks would need 60 billion euros in additional capital should dire circumstances arise. This was within the boundaries that had been previously announced in late June, which estimated that Spanish banks would need in the range of 51 billion to 62 billion euros in additional capital. Also in Europe, the Consumer Price Index (CPI), or a function of gauging inflation, unexpectedly rose from 2.6% to 2.7% annually. Economists were expecting a decline to 2.4%.

Facebook (NASDAQ: FB) continued to rocket off of the lows, rising 6.5% to $21.59, as news reports indicated that the company would be moving ahead with new advertising revenue sources. After reporting better-than-expected earnings, Research In Motion (NASDAQ: RIMM) finished the day 7% higher.

Tomorrow's Financial Outlook

Over the weekend, China will report its monthly manufacturing data. Persistent recessionary data from China continues to cause uneasiness over the global economic picture. In the US on Monday, the ISM will release manufacturing and prices paid indexes for US manufacturers. Recent manufacturing data has pointed to severe slowdowns in US economic activity. If this index shows a similar fall, then this could be troubling for the US economy. Economists are expecting a slight rise from 49.6 to 49.8.

The eurozone will also release manufacturing data on Monday.

There will be no earnings reports on Monday to note.

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