Manufacturing comeback may power cyclical stocks

Denise Chisholm approaches her research by looking at market data through a historian's lens. She believes historical patterns, when considered in the appropriate context, can help investors build conviction about future trends. This month, Denise Chisholm takes a closer look at the ISM Manufacturing PMI, which returned to expansion territory in January after a long stretch of contraction. Historically, sharp increases in new orders have tended to foreshadow stronger ISM readings a year later. And in past periods when the ISM was both expanding and rising, cyclical sectors—particularly machinery and transportation within industrials—most often outperformed.