Stocks Bounce Back After a Rough Patch
After two days of bearish vibes, the U.S. equity market pulled itself together, thanks to a surprising spring in the service sector. The S&P 500 gained 0.5%, with consumer discretionary +1.1%, tech +0.9%, and communications +0.7% leading the charge.
What’s the Trend? The S&P 500 Nears an Old Peak
- The index sits just under its recent all‑time high of around 6,100 – a key resistance level.
- New PMI data shows the private sector is heating up again, with the preliminary S&P Global composite PMI rising to 56.6 in December versus 54.9 in November.
Services vs. Manufacturing: A Tale of Two Worlds
The service sector has taken off, hitting a PMI of 58.5 – the best reading since October 2021. New orders are racing at the fastest pace since March 2022, sparking job growth in that space.
Meanwhile, manufacturing is still stuck in thin ice. The PMI plunged to 48.3 in December, the lowest since the financial crisis (minus the pandemic dip). New orders are shrinking, and production has hit its lowest levels in years.
Why It Matters
- These split signals suggest structural changes in the economy, raising questions over whether the service surge can carry the manufacturing slump.
- Political optimism about a potential loosening of regulations is echoing in the markets, but the manufacturing weakness remains a red flag.
- Inflationary pressures still linger – a reminder that enthusiasm shouldn’t blind investors.
Looking Ahead: The FOMC Showstopper
The final Federal Open Market Committee meeting tomorrow promises to shed light on the 2025 monetary policy outlook. Expect clarity on interest rates and other tools, which will shape the next chapter for the economy and the markets.
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