Purchasing Managers Index Beats Expectations
Last Updated 3:15PM EST
Equity markets are in the red, heading into the final 45 minutes of trading. As of 3:15 p.m. EST, the Dow Jones Industrial Average (DJIA), the S&P 500 (SPX), and the Nasdaq 100 (NDX) are down 0.56%, 0.52%, and 0.12%, respectively. In addition, the 10-year yield is up 10.7 basis points, as it is currently trading around 2.85%.
The United States Chicago Purchasing Managers Index was released by ISM-Chicago, which measures the economic health of the manufacturing sector in Chicago. An expansion is defined by a number that is greater than 50, whereas a reading that is lower is considered a contraction.
It appears that the sector is doing well, as the number came in at 60.3, which was higher than the forecast of 55.
Nasdaq 100 Turns Green, Housing Price Growth Continued Its Acceleration in March
Last Updated 12:30PM EST
Equity markets are off their lows halfway into the trading session. As of 12:30 p.m. EST, the Dow Jones Industrial Average (DJIA) and the S&P 500 (SPX) were down 0.41% and 0.28%, respectively. However, the Nasdaq 100 (NDX) recovered all its losses and is up 0.11%.
In addition, the 10-year yield is up 9.7 basis points, as it is currently hovering around 2.84%.
On Tuesday, Standard & Poor’s released its United States S&P/Case-Shiller House Price Index Composite – 20 n.s.a. This report measures the change in house prices in 20 metropolitan areas.
On a year-over-year basis, the price of homes increased 21.2% in March, higher than the expected 20%. This is the fourth month in a row that the growth rate has accelerated and the fifth month that it has beat estimates. Prices increased 3.1% on a month-over-month basis, representing the fifth straight month of accelerating growth.
However, it’s important for investors to remember that this data is for March, meaning that there is quite a substantial lag in the data.
Stocks Resume Downward Trend after Last Week’s Rally
Last Updated 10:30AM EST
Equity markets are lower in the first hour of the session. As of 10:30 a.m. EST, the Dow Jones Industrial Average (DJIA), the S&P 500 (SPX), and the Nasdaq 100 (NDX) declined 0.86%, 0.84%, and 0.85%, respectively.
Part of the sell-off can be attributed to the rise in oil prices, as the European Union agreed to reduce oil purchases from Russia. It also didn’t help that CPI in the European Union came in higher than expected at 8.1% year-over-year versus the consensus of 7.7%. The same is true for the month-over-month figure, which was 0.8% versus the 0.6% expected.
Investors may be concerned that European central bankers could potentially hike rates higher than expected in order to combat inflation. This scenario would cause a ripple effect in global markets that would impact U.S. equities as well.
Furthermore, an increase in U.S. Treasury Yields is also a contributing factor to today’s sell-off in equities, as the 10-year yield increased by 11.7 basis points. It is currently hovering around 2.86%.
At the moment, it appears that the overall downward trend in equities may continue.
Pre-Market
U.S. stock futures were trending higher in the early morning hours on Tuesday after the rebound in the stock market last week.
Futures on the Dow Jones Industrial Average (DJIA), the S&P 500 (SPX), and the Nasdaq 100 (NDX) were in green as of 4:51 a.m. EST, on Tuesday. The indices posted gains of 0.03%, 0.09%, and 0.4%, respectively.
On Monday, the U.S. stock market was closed due to the Memorial Day holiday.
Last week, the Dow and S&P 500 recorded the best gains in a week since November 2020. The Dow closed 6.2% higher, rebounding from consecutive eight-week losses. Both the S&P 500 and the tech-heavy Nasdaq 100 jumped over 6% in the week, after posting losses for continuous seven weeks.
Investors’ sentiment was driven by strong earnings reports released by the retail sector and the inflation report indicating expectations of ease in prices.
Interestingly, on Friday, major gains of the week were recorded. Particularly, Dow jumped 1.8%, while the S&P 500 recorded gains of 2.5%. Additionally, tech companies’ robust earnings reports and a fall in the 10-year Treasury yield boosted the Nasdaq, which rallied 3.3%.
On Monday, Federal Reserve Governor Christopher Waller said that interest rate hikes should continue at half-percentage points until inflation is restored closer to the 2%.
Investors’ assessments may focus on some big earnings releases today including Salesforce, Inc. (CRM) and HP Inc. (HPQ).
On the economic front, developments will be assessed by investors on the back of the latest data related to the FHFA house price index for March, the Chicago PMI for May, and the Dallas Fed manufacturing index for May, among others.
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