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Why Did US Factory Orders Fall by 1.0% in May?

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Factory orders fall by 1.0%

New factory orders in the US fell by 1.0% in May—compared to the forecast of a fall of 0.8%. The factory orders for April were also revised down to a rise of 1.8%. The report indicated that weak global demand and growing strength of the dollar were the major reasons for the fall in the factory orders. Weak demand was evident in the transportation and defense capital goods sectors. Transportation demand fell by 5.7%, while defense goods fell by 28.1%.

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Looking at the week ahead

The major data release for the week would be the non-farm payroll employment change scheduled for July 8. Before then, we also have other major data releases including the Federal Open Market Committee minutes on July 6. The ISM non-manufacturing purchasing managers’ index is also scheduled for July 6, while the ADP employment data are expected to be released on July 7. Read Why Employment Numbers Are this Week’s Center of Attention for a detailed macro calendar for the week.

Banking and energy ETFs fall

US markets were trading on a negative bias on July 5. They took cues from negative sentiments in the global markets. Read Are Global Indexes Pointing to a Weak Start for US Markets? to learn how the global indexes were trading weaker.

The ETFs that posted major losses on July 5 included the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). XOP fell by 3.7%. In the energy sector, the Energy Select Sector SPDR ETF (XLE) fell by 2.0%.

The banking sector was also on a steep negative trajectory. Both the SPDR S&P Bank ETF (KBE) and the SPDR S&P Regional Banking ETF (KRE) fell by 3.0%. Risk aversion saw the SPDR Gold Shares ETF (GLD) and the Utilities Select Sector SPDR ETF (XLU) rise by 0.83% and 0.74%, respectively.

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