Major Indices Recover With a Slight Pullback
After reaching new multi-week highs in the middle of the session under turbulent, two-way trading circumstances, the major US stock indexes settled somewhat below Friday's closing levels. The most recent set of tier 1 US statistics, the July ISM Manufacturing PMI survey, revealed that the US industrial sector's growth had slowed to its lowest level in more than two years and that indicators of the future, such the New Orders subindex, had moved deeper into contractionary territory.
This increased worries that a recession is either already present in the US economy or is about to start. More encouragingly, however, is the fact that the ISM prices paid subindex, a measure of the inflationary pressures faced by manufacturers, experienced a significant decline in July to its lowest level in two years, suggesting that US inflation has likely peaked at the moment.
Together, the signs of a slowing economy and declining inflationary pressures imply that the US Federal Reserve won't need to raise interest rates as quickly in the next quarters, as markets have begun to bet on recently. Despite the fact that some traders were obviously taking profits last week as US stocks finished their highest month since 2020, confidence about a more dovish Fed tightening outlook is now holding the bears at bay.
The S&P 500 was last trading down around 0.25 percent at 4,120 after flirting with 4,150 earlier in the day. The bulls are still aiming for a test of early June's highs in the 4,170s. For the first time since early May, the Nasdaq 100 index was temporarily able to surge over the 13,000 mark, but it has since fallen back to trade around the 12,900s. The Dow almost missed reaching 33,000 before reversing course and trading largely flat at over 32,800 today.
Equity investors are anticipating the publication of US employment data for July on Friday. This data is anticipated to demonstrate that the US labor market is still strong, despite a little cooling.
Sector Energy Slacks Boeing shares increase as oil prices decline
The energy GICS sector of the S&P 500 fell by approximately 2.0% as a result of a strong decline in global oil prices and bad global manufacturing PMI survey data (from the US, UK, China, and Japan as well as the Eurozone). Thus, the index has given up a significant amount of last Friday's 4.5 percent increase, which was mostly fueled by quarterly earnings records for Exxon Mobil and Chevron.
The majority of the other sector was also in the red, but to a smaller extent than energy, with just Consumer Staples (+1.2%), Industrials (+0.2%), and Consumer Discretionary (+0.6%) showing positive returns. A Reuters story that the US aviation authority had accepted Boeing's inspection and modification plan, allowing it to start deliveries of its 787 Dreamliner plane, caused the share price of Boeing to soar to its highest levels since late April, according to major individual stock articles.
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