Stocks Up, Dollar Down on Weak U.S. PMI Data
Stocks Up, Dollar Down on Weak U.S. PMI Data
By:Ilya Spivak
But some trends still point lower for Wall Street, the euro and the pound
April PMI data tops expectations in Europe but disappoints in the U.S.
Stocks cheer and the U.S. dollar falls as Fed interest rate cut hopefuls find a lifeline.
Trends still point lower for Wall Street and the euro and British pound.
April marked an unexpected turn of the global business cycle, according to the latest round of purchasing managers index (PMI) data from S&P Global. The numbers revealed momentum was building behind economic recovery in Europe while performance in the U.S. has taken a sudden turn for the worse.
In the Eurozone, a booming service sector pushed the pace of economic activity growth to the fastest in 11 months even as contraction on the manufacturing side accelerated. It was the same story in the U.K. That PMI survey also recorded an 11-month high for overall growth as service-sector strength offset manufacturing weakness.
April PMI data: Europe heats up as the U.S. stumbles
The U.S. data set was decidedly gloomier. The service sector cooled for a third consecutive month while manufacturing snapped a three-month expansion streak, recording its first contraction of the year. That boiled down to the weakest growth in nonfarm economic activity since December.
The markets’ eagle-eye focus on Federal Reserve monetary policy expectations made the U.S. survey the most impactful of the bunch. Stocks jumped higher and the U.S. dollar slumped immediately as the data crossed the wires. Tellingly, that lined up with an instant five-basis-point (bps) shift in the priced-in 2024 rate cut outlook, from 32bps to 38bps.
As the dust settled, however, the European Central Bank (ECB) and the Bank of England (BOE) still looked as though they would “out-dove” the Fed this year, delivering more stimulus than will be on offer across the Atlantic. The currency bloc is priced in for 81bps in cuts this year while the U.K. is expected to see 55bps in easing.
Stock market still in trouble, U.S. dollar aiming higher
This hints the greenback will retain a yield advantage against the euro and the British pound, making its pullback appear corrective within a broader uptrend. As for stocks, they might struggle to build a lasting uptrend while the markets are priced on the hawkish side of the Fed’s own stated view, last set on March 20 at 75bps in cuts for the year.
Ilya Spivak, tastylive head of global macro, has 15 years of experience in trading strategy, and he specializes in identifying thematic moves in currencies, commodities, interest rates and equities. He hosts Macro Money and co-hosts Overtime, Monday-Thursday. @Ilyaspivak
For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.
Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.
tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on tastytrade.com/disclosures.
tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.
tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.
tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.
© copyright 2013 - 2024 tastylive, Inc. All Rights Reserved. Applicable portions of the Terms of Use on tastylive.com apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastylive’s podcasts as necessary to view for personal use. tastylive was previously known as tastytrade, Inc. tastylive is a trademark/servicemark owned by tastylive, Inc.