*AAPL, MSFT, NVDA - Buy / Sell in falling PMI ?
Recap.
In my Tuesday post, I have highlighted that US Manufacturing Purchasing Manager Index (PMI) report is 1 of 5 factors to watch out for week beginning 03 Mar 2025. (click here ! for details, Repost & share ok).
Well, the PMI report is out and it’s not great news ! (see below)
US Manufacturing PMI.
Manufacturing activity in the US slowed in February 2025 as (1) demand weakened, (2) output growth eased and (3) prices surged as producers braced for a raft of tariffs threatened by the new US administration.
The Institute for Supply Management's (ISM) manufacturing purchasing managers index registered 50.3 for February 2025 vs economists’ expectations of 50.6 vs January’s 50.9.
Despite -0.6 points dropped from January, the Manufacturing PMI still registered a 2nd month of growth after 26 consecutive months of contraction.
Note: the breakeven point between growth and contraction is 50.
February’s data is falling marginally short of estimates.
ISM has confirmed that "US manufacturing activity expanded marginally for the 2nd month in a row in February.
Demand weakened, while output stabilized.
Inputs defined as supplier deliveries, inventories, prices and imports, revealed the first signs of supplier difficulties due to some pull-forward deliveries and discussions about who will pay for tariffs.
ISM Manufacturing New Order Index.
Additionally, the new orders index dropped back into contraction territory in February 2025, after expanding for 3 months.
For February 2025, it registered 48.6%, down -6.5% from January’s 55.10%. (see above)
All Other February Indexes.
-
Production index was at 50.7, down from 52.5 in the prior month but still showing growth after eight months of contraction.
-
Prices index rose to 62.4, up from 54.9 in January.
-
Backlog of orders index registered 46.8, up from 44.9 in January. The employment index came in at 47.6, down from 50.3 the prior month.
-
Supplier deliveries index was at 54.5, up from 50.9 and indicating further slowing in deliveries as the economy improves.
-
New export orders index reading of 51.4 was down from 52.4 in January, showing slowing growth. The imports index rose to 52.6, up from 51.1 in January.
Tariffs Worries.
Exacerbating the decline in US manufacturing will be Trump’s tariffs:
-
25% of it against Mexico & Canada, taking effect on Tue, 04 Mar 2025.
-
10% additional tariffs against China, on top of an existing10% levied on 03 Feb 2025.
Manufacturers are frustrated with the uncertainty on how White House's tariff plans would:
-
Affect their operations and the US economy.
-
Create uncertainty and volatility to their customers that depends on products imported from Mexico and Canada.
-
Increase their (business) exposure to retaliatory measures from these countries.
Confirmed Retaliations.
The issue with Trump and Musk is they are forever short on details and specifics.
Perhaps that’s a game plan or maybe there isn’t any to begin with. Afterall a well-thought-out plan takes time to prepare and does not materialize on the fly.
While the new government continues to confuse US manufacturing sector, both China and Canada have announced their action plans, respectively. (see below)
On 05 Mar 2025, Mexico finally announced that they will announce their tariffs retaliation on Sun, 9 Mar 2025.
Are we witnessing the start of global trade war that is about to be unleash by the world’s #1 economy, that used to prophesize free trades and the green economy ?
Pathological “Story Teller”.
Upon winning the presidential election, on 06 Nov 2025, Trump already mentioned to the press “We’ve been screwed by Mexico and by China and by Canada and by the European Union”.
Hence the necessary 25% tariffs. This is simply untrue. Roll back to 03 Oct 2018 when he was in his initial presidential term. (see below)
He was the then president to sign a new trade deal - the United States Mexico Canada Agreement (USMCA) with Mexico and Canada, effectively replacing the 25-year-old, trillion-dollar North American Free Trade Agreement (NAFTA).
If US is indeed screwed by both Canada and Mexico, he and his then administration (his daughter, son-in-law, son) should be responsible for allowing it to happen - right ?
Manufacturing Stocks To Be Aware.
Politics aside, with a falling Manufacturing PMI that looks set to worsen in March 2025 with the tariffs’ triggered, the possible top 3 manufacturing stocks (by market cap) that are likely to be most affected the are:
(1) $Apple(AAPL)$
Market Cap: $3.58 trillion.
As the largest US company by market cap, Apple's extensive supply chain and manufacturing operations, outside of the US make it “highly sensitive” to changes in manufacturing activity.
-
On Wed, 05 Mar 2025 it has fallen another mild -0.08% or -$0.19, ending the day at $235.74.
-
Will there be more blood letting with Trump’s tariffs in full swing ?
(2) $Microsoft(MSFT)$.
Market Cap: $2.89 trillion.
Although primarily a software company, Microsoft's hardware division, including Surface devices and Xbox consoles, could be impacted by manufacturing slowdowns.
-
Unlike Apple, Microsoft has a “strong” recovery, up by +3.19% or +$12.41 to end Wednesday back above the 400 marker at $401.02.
-
The last time Microsoft sat below the $400 mark was backed in 30 Apr 2024 when it reported its quarterly earnings that was short of market expectations.
(3) $NVIDIA(NVDA)$.
Market Cap: $2.79 trillion.
As a leading semiconductor company, Nvidia’s business is closely tied to manufacturing trends, especially in the technology sector.
More importantly with (a) escalating trade war between US & China and (b) China’s self-reliance policy on semiconductor technology, it only spells falling profits for Nvidia.
-
On Wednesday, Nvidia recovered some lost grounds, up by +1.13% or +$1.31 to end the day at $117.30 per share.
-
The last time it was this “low” was back in 18 Sep 2024.
-
This begs the possibility question of Nvidia climbing above $120 mark by end of the week ? Heavens forbid !
These 3 IT giants are likely to be affected due to their:
-
Large market presence.
-
Heavy reliance on manufacturing processes for their products.
A falling Manufacturing PMI can indicate slower growth in the manufacturing sector, potentially impacting production, supply chains, and overall business performance for these tech giants.
Questions swirling in my mind now are (1) do we buy on further corrections or (2) take profit and run for the hills before things get ugly. Que sera sera !
Must Read: Click on below titles to access. Repost to share, Like as encouragement ok. Thanks.
-
Do you think US market will undergo heavy corrections this week?
-
Do you think to cash out on the 3 IT giants and revisit at a cheaper price ?
If you find this post interesting, give it wings! ️ Repost and share the insights ?
Do consider “Follow me” and get firsthand read of my daily new post. Thank you.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
Pls "Re-post" so that more get to know. Tks! Rating is important (to me).
Consider "Follow me" and get first hand read of my Daily new posts? Thanks!). Tks!!