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All three major indexes turn red; Nasdaq down most, off
~0.3%
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Materials weakest S&P 500 sector; staples lead gainers
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Euro STOXX 600 index up ~0.1%
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Dollar, crude up slightly; gold, bitcoin fall
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U.S. 10-Year Treasury yield edges up to ~3.57%
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DOES PMI WARMING TREND = HOTTER INFLATION? (1100 EDT/1500 GMT) Business activity in the United States is gaining some heat this month.
S&P Global's advance "flash" purchasing manager indexes (PMI) mid-month temperature takes on the manufacturing and services sectors, both landed above 50, signifying monthly expansion.
The manufacturing PMI surprised analysts by crossing over that line, rising 1.2 points to 50.4, while services gained 1.1 points to 53.7. Consensus expectations called for readings of 49 and 51.5, respectively. Together, they form a composite print of 53.5, 1.2 points warmer than March and the highest composite number in 11 months.
While news about economic resiliency is fine and dandy for recession worry-warts, a drill-down into the report shows input and output costs both rose, prompting the steepest jump in operating costs in three months, to "historical levels," according to S&P Global. "The latest survey adds to signs that business activity has regained growth momentum after contracting over the seven months to January," writes Chris Williamson, chief business economist at S&P Global. "However, the upturn in demand has also been accompanied by a rekindling of price pressures. Average prices charged for goods and services rose in April at the sharpest rate since September of last year." Below we see composite output and input costs against core CPI:
Financial markets are 88% certain that the Federal Reserve will implement another 25 basis point rate hike at the conclusion of next month's policy meeting as part of its ongoing battle against inflation, according to the CME's FedWatch Tool. But while recent data suggests a gradual inflation cool-down, any upward price pressures are decidedly unwelcome. Wall Street wobbled in the wake of the report, but was red at last glance.
(Stephen Culp)
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WALL STREET SEARCHES FOR DIRECTION (1015 EDT/1415 GMT) Wall Street equities started Friday's session in a ho-hum manner, disinclined to move that much in either direction, but then lost steam soon after the release of economic data with all three major indexes turning red and Nasdaq falling most. There has since been some firming, with the main indexes now all around flat. U.S. business activity accelerated to an 11-month high in April, according to a survey on Friday, which was at odds with growing signs that the economy was in danger of slipping into recession as higher interest rates cool demand. When looking at data investors are calculating the outlook for interest rates as well as the strength of the economy as the Fed has been laser focused on dampening high-inflation.
The U.S. 10-year Treasury yield reacted more notably, hitting its high for the session so far after the data.
Still, under the hood, the S&P 500 consumer staples sector is pushing higher with the strongest gains in Procter & Gamble .
A quarterly update from the company, which sells everything
from washing detergent to toothpaste, showed customer acceptance
of repeated price hikes, allowing it to boost its third-quarter
margins and raise its full-year sales forecast.
All three indexes so far, are tracking for small declines
for the week and the Dow is eyeing its first weekly loss out of
five weeks.
A week in, the start of earnings season has brought a mixed
bag of goods so far with Refinitiv data pointing to a lop-sided
81 negative EPS pre-announcements vs 26 positive. But out of the
88 S&P 500 companies that had reported Q1 results at the time of
its research publication, so far ~76% had beaten Wall Street's
earnings expectations while ~19% had reported earnings that fell
short of estimates. And in aggregate earnings were 7.8% above
expectations vs the average beat of 4.1% going back to 1994.
Here is your snapshot from 1023 EST:
(Sinéad Carew)
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S&P 500 INDEX: BEARS START TO STIR? (0900 EDT/1300 GMT) The S&P 500 index fell about 0.6% on Thursday to end at 4,129.79. That said, it was its biggest drop in about a month. Given recently compressed volatility, traders are on guard for any downside acceleration in the SPX:
The S&P 500's intraday range as a percentage of the prior day's close has recently seen some relatively narrow readings. In fact, the seven-tightest readings by this measure so far this year have occurred since late March. Three of those sessions happened Monday-Wednesday of this week. The tightest reading was 0.53% on April 11. This was the lowest since Nov. 25 of last year, which was the post-Thanksgiving holiday shortened session. On Thursday, however, this measure jumped to 0.82% from 0.68% on Wednesday. The 2023 average is 1.32% per session. Additionally, with this, the CBOE volatility index , ticked up from its lowest level since November 2021. Thus, traders are on alert for an increase in volatility, as it tends to coincide with periods of instability. This, as the SPX has struggled to clear weekly cloud resistance at 4,155. On Tuesday and Wednesday of this week, the index ended within decimals of this barrier, only to break to the downside on Thursday. The next support below Thursday's 4,114,57 low is in the 4,078-4,069 area. The 50-day moving average ended Thursday at about 4,034. A weekly close above 4,155 may put bears back in their caves, though another stiff resistance barrier resides in the 4,195-4,203 area.
(Terence Gabriel)
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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
