The U.S. Institute for Supply Management (ISM) reports nine consecutive months of manufacturing contraction while the S&P 500 hits all-time highs. This rare occurrence has only happened three times before, in 2023-2024,1995-1996, and 1984-1985.

The shrinking manufacturing sector now makes up less than 10% of the U.S. economy, down from over a quarter in 1948. A prolonged period of weakness is attributed to inventory depletion post-lockdowns and the impact of tariff actions in 2025.

Customer inventories data from the PMI shows continued contraction in 2025, with inventories reported as “too low” on a net basis. This suggests a bullish outlook for the industrial sector as companies may need to replenish inventory, supported by tariff actions and investments in expanding capacity.

Investing in industrial economy stocks in 2026 could be beneficial, as history indicates an industrial recovery may be on the horizon amidst concerns about AI stock valuations and overall economic growth. An expert team may issue a “Double Down” stock recommendation for companies poised to succeed.

Read more at Yahoo Finance: Stock Markets Are Doing Something They’ve Only Done 3 Times Since 1948 — Should You Be Worried?