After an impressive three-day rally, the Dow Jones has edged lower today, dropping 0.35% to 14,970, while the S&P 500 was down less than 0.1% in the last hour of trading on Wall Street. At those levels, the Dow is set to complete its best performance for the first half of a year since 1999 and the S&P 500 is on track for its best first half since 1998. All three major US stock indices are down substantially for the month of June though.
Economic data today hasn’t been quite as robust as the strong set of reports we saw yesterday, but overall still suggests economic conditions are positive.
The index of consumer sentiment from the University of Michigan gave a final level of 84.1, up from the preliminary reading we saw earlier in the month of 82.7. This suggests a strong improvement in the last couple of weeks, but is slightly lower than the 84.5 we saw at the end of May. Consumer sentiment remaining at these kind of high levels bodes well for consumer spending, which should help to drive the economy forward in coming months.
The ISM Chicago PMI, which measures business activity in the Chicago area, showed a slowing in the pace of growth in June; the reading of 51.6 was a sharp drop from May’s 58.7, but still indicates expansion. Bright spots included the employment and new orders components.
We have two important reports on the US manufacturing sector out on Monday, one from the Institute of Supply Management and one from Markit. Both are compiled from surveys of purchasing managers at manufacturing firms throughout the US. Manufacturing has correlated quite closely with changes in the business cycle historically, so can give an insight into inflexion points in the direction of the economy.