(By Rich Bieglmeier) Ouch, OUCH!!! - that hurts. Polled economists expected a slight moderation in today's Durable Goods Orders. The consensus forecast was for a dip of 1.7% from last month Oh, but that's not what happened. New orders for manufactured durable goods decreased $8.8 billion or 4.2 percent in March. Ouch, OUCH!!! - that hurts.
Take out transportation and it got a little better as new orders decreased 1.1 percent. Excluding defense, new orders decreased 4.6 percent. Ouch, OUCH!!! - that hurts.
Transportation equipment, primarily non-defense aircraft and parts, was the biggest culprit in the headline number, falling $7.1 billion or 2.5 percent to $49.7 billion. Perhaps, the news explains why the Aerospace sector underperformed in the last month. However, the industry's chart has improved and may have bottomed mid-month. Overall, iStock believes there are better places to put your money.
Defense was clearly the best performing industry as new orders for defense aircraft and parts rose 15.5%, while defense capital goods were up 10.3%.
Names like Alliant Techsystems Inc. (ATK) and The Boeing Company (BA) are two of the better performing names in the sector today.
Electrical equipment & appliances (3.2%), communications equipment (1.3%), and motor vehicles and parts (0.1%) were the only other industries to join defense in the green.
Whirlpool Corp. (WHR) and Lifetime Brands, Inc. (LCUT) are two appliance and electric gadget companies that are faring well this Wednesday. Meanwhile, the communications sector has more than a handful of names that are up 3% or more.
Calix Inc. (CALX), Infinera (INFN), Corning (GLW), Motorola Solutions (MSI), Sonus Networks (SONS), ViaSat Inc. (VSAT) and Arris Group Inc. (ARRS) are a few large-caps worth monitoring.
The report's most ominous note is that capital goods, excluding aircrafts (CG-A) - big ticket items usually purchased by companies rather than individuals – were down 0.8% while Wall Street expected a gain of 1%. CG-A is known as the "core capital goods orders". It's probably the most watched metric as it begins to slip or rebound six to 12 months prior to a new up-trend or downturn in the economy. Astute investors will add next month's Durable Good's Orders report to their favorites to see if the CG-A trend continues to falter or returns to the plus column.
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