Sector Snap: Diversified Industrials Rise

NEW YORK (AP) — Stocks of industrial companies that make engineered products rose Friday after an analyst upgraded the shares of several that stand to gain as the global recession ends.

Barclays analyst Shannon O'Callaghan said evidence is mounting that the economy appears to have hit a firm bottom, citing improved industrial production, which is currently less than demand, plus strengthening durable goods orders.

Auto production and housing starts are coming off "unsustainably low levels" and consumer confidence appears poised for an increase, O'Callaghan said.

"In addition to a turn in jobs, a turning in housing prices combined with the recovery in other asset prices could drive improvement in wealth effect impact on spending," the analyst wrote in a client note.

His views were echoed by KeyBanc analyst Jeffrey D. Hammond, whose recent visits to various diversified industrials left him with a similar impression.

"Across ... various end markets, it appears that early-cycle demand has demonstrated modest sequential improvement in select verticals while mid- and late-cycle markets have largely stabilized but have yet to reach an inflection point," Hammond said.