Honeywell International Inc.  (HON) shares fell Thursday even after an upgrade by Credit Suisse as investors fled industrial stocks on signs that manufacturing was slowing in the U.S. and as concerns grew about the prospects of U.S. companies making sales in China.

Honeywell fell $1.80, or 1.4%, to $130.07, in trading on the New York Stock Exchange. Other major industrial companies fared worse, with Caterpillar Inc.  (CAT) dropping 3.9%, 3M Co.  (MMM) losing 3.8% and United Technologies Corp.  (UTX) slipping by 4.5%.

Credit Suisse analyst John Walsh upgraded Honeywell to outperform from neutral with a price target of $158, saying the company will benefit from the spinoff of Resideo Technologies Inc., a maker of home heating, ventilation and air conditioning controls and security markets and a distributor of security and fire protection products.

"HON also has balance sheet optionality and is better positioned (e.g., simpler, liability containment) to perform during macro volatility," the analyst wrote.

Jim Cramer's Action Alerts PLUS team also upgraded its recommendation of Honeywell to a "One," meaning it is a stock to buy now. Cramer's view is that the U.S. and China will soon resolve their differences and make a trade deal.

"We've recently become increasingly optimistic of a U.S.-Chinese trade deal as a way to spur American economic activity," the AAP team wrote. "After all, the Trump administration has far too often graded its performance on U.S. economic growth, so we don't think it wants to be part of the blame for any slowdown. Should such a deal happen, we expect industrials like Honeywell to rally. But if we're wrong and the trade war persists, HON will still represent one of the highest-quality industrials in the market."

Separately, the Institute for Supply Management's U.S. manufacturing index fell last month by the most since October 2008, a fresh sign of deceleration in the economy amid global strains across the sector. The Dow Jones Industrial Average, along with the other major stock indexes, already was down after Apple Inc.  (AAPL) warned of slowing sales but fell to new lows on the ISM news.

The ISM manufacturing index tumbled 5.2 points to a two-year low of 54.1, missing the estimates of all the economists surveyed by Bloomberg. All five main components declined, led by new orders slumping the most in almost five years and the steepest slide for production since early 2012. Employment, delivery and inventory gauges fell.

The weakness added to signs that prospects of trade wars and the dwindling effects from fiscal stimulus are weighing on American manufacturers. Previous reports showed five Federal Reserve regional manufacturing gauges declined in December, the first time they've fallen in unison since May 2016.

To read Jim Cramer and his Action Alerts PLUS team's full note on Apple's announcement, click here.