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Market Commentary - Foreign Markets
US Stocks end mixed after weak factory activity data As on : 04-Jun-24  09:00

US stock market finished session on a mixed note after flip flopping throughout the trading day on Monday, 03 June 2024, as risk sentiments hurt after data showing a contraction in the nation's manufacturing activity fell for the second consecutive month in May

A weaker-than-expected reading on the manufacturing sector pushed the major averages lower as investors debate the future path of Fed rate cuts. U.S. Treasury yields fell to the lowest point in two weeks, after the country's manufacturing activity slipped for the second consecutive month in May.

At closing bell, the Dow Jones Industrial Average index declined 115.29 points, or 0.3%, to 38,571.03. The S&P500 index added 5.89 points, or 0.11%, to 5,283.40. The tech-heavy Nasdaq Composite index increased by 93.65 points, or 0.56%, to 16,828.67.

Total 6 of 11 S&P500 sectors ended lower despite gain in the S&P500 Index. Information technology sector was top performer, rising 1%. Energy sector was bottom performer, falling 2.6%.

Nvidia shares climbed 3.4% after launching new products and services over the weekend.

GameStop jumped around 20% after a Reddit post by Keith Gill showed a $116 million bet on the video game retailer. Fellow meme darling AMC's shares shot up 10% alongside the move. JetBlue Airways climbed 4.9 per cent after raising revenue forecast for the current quarter.

Paramount shares surged as much as 9% on reports that the legacy media giant has reached an $8 billion takeover agreement with David Ellison's Skydance Media.

ECONOMIC NEWS: US ISM Manufacturing Index Edges Lower In May- Manufacturing activity in the U.S. unexpectedly contracted at a slightly faster rate in the month of May, according to a report released by the Institute for Supply Management on Monday. The ISM said its manufacturing PMI edged down to 48.7 in May from 49.2 in April, with a reading below 50 indicating contraction. The unexpected decrease by the headline index partly reflected a faster contraction in new orders, as the new orders index fell to 45.4 in May from 49.1 in April. The production index also slipped to 50.2 in May from 51.3 in April, although a reading above 50 still indicates growth. Meanwhile, the ISM said the employment index rose to 51.1 in May from 48.6 in April, indicating a rebound by employment during the month. The report also said the prices index slid to 57.0 in May from 60.9 in April, suggesting a slowdown in the pace of price growth.

US Construction Spending Logs Surprise Fall In April- US construction spending shrunk unexpectedly in April amid declines in both private and public construction, preliminary data from the U.S. Census Bureau showed Monday. Construction spending dipped 0.1% to $2,099.0 billion from the revised estimate of $2,101.5 billion in March. The April figure was 10.0% higher than the April 2023 estimate of $1,907.8 billion. In April, spending on private construction was $1,611.9 billion, which was 0.1% lower from the revised March estimate of $1,613.3 billion. Residential construction grew 0.1% to $890.4 billion from a revised $889.5 billion in March. Non-residential construction shrunk 0.3% to $721.5 billion from a revised $723.8 billion in the previous month. Public construction spending totaled $487.1 billion in April, down 0.2% from the revised March estimate of $488.2 billion. With this, educational construction decreased 0.2% to $103.5 billion from a revised $103.6 billion in the previous month. Highway construction shrunk 0.5% to $149.6 billion from the revised March estimate of $150.4 billion. During the first four months of this year, construction spending totaled $635.5 billion, up 10.9% from the $573.0 billion for the same period last year.

US Manufacturing PMI Rise To 51.3 In May- New orders returned to growth in the US manufacturing sector in May, supporting a faster expansion in production midway through the second quarter of the year. Meanwhile, business confidence picked up and positive expectations regarding the future for the sector contributed to the hiring of additional staff, a renewed rise in purchasing activity and a build-up of stocks of finished goods. Meanwhile, the rate of input cost inflation quickened to the fastest in just over a year, with firms raising their selling prices in response. The seasonally adjusted S&P Global US Manufacturing Purchasing Managers? Index (PMI) rose to 51.3 in May, after having posted in line with the 50.0 no-change mark in April. The reading signaled a modest improvement in the health of the manufacturing sector, the fourth in the past five months. May saw a renewed expansion in new orders, following a modest reduction in April. The rise in total new business was softer than that seen for new export orders, which increased at the fastest pace in two years. The increase in new orders, alongside better material availability, led manufacturers to expand production at a solid pace in May, with the rate of growth quickening from that seen in April. Optimism regarding future new orders and production requirements encouraged manufacturers to take on additional staff, raise purchasing activity and accumulate stocks of finished goods. Meanwhile, the rise in purchasing activity in May was the first in three months, but only marginal. The rate of input cost inflation continued to accelerate, quickening for the third consecutive month to the fastest since April 2023.

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