Strong ISM Non-Manufacturing PMI Overshadows Services PMI

The non-manufacturing PMI (purchasing managers’ index) is published by the Institute for Supply Management. It rose to the highest level since November 2015. The rise also coincided with the strong manufacturing PMI—it rose to 53.2 in May. The non-manufacturing PMI for May rose to 56.5—compared to the forecast of 53.3. The rise was primarily attributed to the increase in new orders—they rose by 5.9 points to 59.9. The business activity also rose to 59.5. The backlog of orders saw the only major fall—it fell by 2.5 points to 47.5.

Markit reported a slight expansion in the service sector activity in June. The report indicated an expansion in new business at the fastest pace since January. However, the rate of growth in jobs fell to a 17-month low in June. Global concerns and strength in the US dollar continue to show a bleak outlook. The business confidence index fell to a new survey record low.

All major sector-based SPDRs were on a positive bias on July 5. The SPDR S&P Biotech ETF (XBI) led the gains. It rose by 2.7%.

The banking sector rose after the Federal Open Market Committee meeting minutes didn’t completely rule out a rate hike later in the year. The SPDR S&P Bank ETF (KBE) and the SPDR S&P Regional Banking ETF (KRE) rose by 0.73% and 0.79%, respectively. The SPDR Gold Shares ETF (GLD) and the Utilities Select Sector SPDR ETF (XLU) usually have a high negative correlation to other SPDRs. However, they rose by 0.59% and 0.21% on June 29 despite the rise in the other ETFs.