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Institute for Supply Management Index

Institute for Supply Management Index

| April 26, 2021

Strategists at investment bank behemoth Goldman Sachs recently noted that their economists expect U.S. GDP growth to remain above trend through the next few quarters; however, they caution that this will not necessarily translate to equally outsize gains in the stock market.  In the chart below, stock market gains for the following 3, 6 and 12 month periods are grouped by Institute for Supply Management (ISM) index values at the start of the periods.  What it shows clearly is that the best stock market gains come from good-but-not-spectacular ISM values, while the red-hot “greater than 60” ISM values are typically followed by low or even negative stock market returns.  The current ISM value is 65 – squarely in that red-hot category.

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Jeffrey Cerny