SP500 Rebounds From Session Lows As Composite PMI Exceeds Expectations

Key Insights

• Manufacturing PMI decreased from 50.2 to 48.5.
• Services PMI increased from 53.6 to 55.1.
• Composite PMI improved from 53.4 to 54.5.

Manufacturing PMI Slips Below The 50 Level

On May 23, S&P Global released the flash readings of PMI reports for May. Manufacturing PMI declined from 50.2 in April to 48.5 in May, compared to analyst consensus of 50. Numbers below 50 show contraction.

Services PMI increased from 53.6 to 55.1, compared to analyst consensus of 52.6. Composite PMI improved from 53.4 in April to 54.5 in May due to the strong performance of the services segment.

S&P Global commented: “The rise in output was the sharpest since April 2022, but led by service providers, who reported stronger demand conditions.”

Treasury yields continued to move higher after the release of PMI reports. The better-than-expected Composite PMI and debt ceiling uncertainty served as bullish catalysts for Treasury yields.

U.S. Dollar Gains Ground As Treasury Yields Rise

U.S. Dollar Index settled near the 103.50 level as traders focused on rising Treasury yields. Bond traders are worried that U.S. will not raise the debt ceiling before June 1, which is bearish for U.S. government bonds and bullish for yields.

Gold is trading near the $1965 level. Stronger dollar and higher yields put pressure on gold markets.

SP500 rebounded from session lows after the release of PMI reports. It remains to be seen whether this rebound will be sustainable as traders may stay focused on debt ceiling negotiations.

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