US factory orders were 0% month on month in February. Forecasts had pointed to -0.2%.
The result was 0.2 percentage points above expectations. It indicates orders were unchanged from the previous month.
Industrial Orders Show Resilience
The February factory orders coming in flat at 0% instead of the expected decline is a sign of resilience in the industrial sector. This suggests the feared manufacturing slump may not be as severe as we anticipated. For traders, this lessens the immediate downside risk for industrial stocks and related indexes in the coming weeks.
This report aligns with the recent March ISM Manufacturing PMI, which ticked up to 50.3, its first expansionary reading in over a year. However, with the latest CPI showing inflation holding firm at 3.2%, the Federal Reserve has little reason to consider near-term rate cuts. We should therefore adjust options strategies that were betting on a quick pivot to easier monetary policy.
We saw a similar dynamic for parts of 2025, where weakening economic data did not lead to immediate Fed rate cuts due to stubborn inflation. During that time, the market focused more on corporate earnings and sector-specific strength. This historical context suggests we should favor trades based on individual company performance rather than broad bets on monetary policy.
Given the current low market volatility, with the VIX trading near 14, selling put options on industrial ETFs like XLI could be an attractive strategy. This approach allows us to collect premium while betting that the sector has found a floor, supported by this better-than-feared data. We can use the coming weeks to monitor if this stabilization holds before considering more aggressive bullish positions.
