SP500 Pulls Back From Yearly Highs As ISM Services PMI Misses Expectations
Key Insights
- ISM Services PMI declined from 51.9 in April to 50.3 in May.
- S&P Global Services PMI improved from 53.4 to 54.3.
- Factory Orders increased by 0.4% in April.
On June 5, the Institute for Supply Management reported that ISM Services PMI declined from 51.9 in April to 50.3 in May, compared to analyst consensus of 52.2. Numbers above 50 show expansion.
ISM commented: “There has been a pullback in the rate of growth for the services sector. This is due mostly to the decrease in employment and continued improvements in delivery times (resulting in a decrease in the Supplier Deliveries Index) and capacity, which are in many ways a product of sluggish demand.”
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Today, traders also took a look at the final reading of S&P Global Services PMI report, which showed that Services PMI increased from 53.6 in April to 54.9 in May. Analysts expected that Services PMI would grow to 55.1.
Traders also focused on the Factory Orders report, which indicated that Factory Orders grew by 0.4% month-over-month in April, compared to analyst consensus of +0.8%.
U.S. Dollar Index tested the 104 level after the release of the ISM Services PMI report. FedWatch Tool indicates that there is a 77.1% probability that Fed will leave the federal funds rate unchanged at the upcoming meeting. The sluggish demand in the services sector serves as another argument against a rate hike, which is bearish for the U.S. dollar.
Gold rebounded towards the $1960 level as traders focused on U.S. dollar’s pullback and falling Treasury yields.
SP500 settled near the 4285 level. Stocks are trading near yearly highs, and traders are waiting for additional positive catalysts.
For a look at all of today’s economic events, check out our economic calendar.