/Dow Suffers Whiplash After IHS Markit Dumps Dismal Economic Data

Dow Suffers Whiplash After IHS Markit Dumps Dismal Economic Data

  • The Dow surged at Monday’s opening bell, only to slide more than 250 points intraday to erase virtually all of the 290 point rally.
  • The stock market retrace followed the release of dismal manufacturing data, which raised questions about the health of the U.S. economy.
  • The S&P 500 and Nasdaq clung to moderate gains.

The Dow and broader U.S. stock market advanced on Monday but failed to hold session highs, as lukewarm economic data continued to weigh on investor sentiment.

Dow Erases Record High

All of Wall Street’s major indexes traded well off session highs in late afternoon trading. After rallying as much as 290 points, the Dow Jones Industrial Average pared gains and was last up 39.21 points, or 0.2%, at 26,639.17.

Dow JonesDow Jones
After surging to record highs, the Dow Jones Industrial Average gives back most of its gains on Monday. | Source: Yahoo Finance.

The broad S&P 500 Index of large-cap stocks advanced 0.4% to 2,953.47, where it teetered on the brink of record territory. Gains were largely concentrated in five of 11 primary sectors, with information technology leading.

Surging technology shares helped the Nasdaq Composite Index add 0.7% to trade at 8,065.53.

U.S. Manufacturing Sector Barely Grows in June

US economy impact on DowUS economy impact on Dow
Trade-war uncertainty is placing downward pressure on the U.S. manufacturing sector, according to the latest batches of PMI data. | Source: Shutterstock.

The U.S. manufacturing sector narrowly avoided a downturn at the end of the second quarter, as new orders returned to growth.

IHS Markit’s U.S. manufacturing purchasing managers index (PMI) improved to 50.6 in June from an upwardly revised 50.5 in May. Analysts in a median estimate were expecting a June reading of 50.1.

On the PMI scale, 50 separates expansion from contraction.

U.S. manufacturers are stagnating due to increasing cost burdens, trade-related uncertainty, and dismal new-order growth. As a result, manufacturing employment grew at the slowest pace since August 2016.

June was a dismal month of hiring overall. Employers added just 75,000 workers to payrolls last month, one of the weakest hiring rates since the financial crisis.

“U.S. manufacturers reported business conditions to have remained the toughest for nearly a decade in June,” Chris Williamson, IHS Markit’s chief business economist, said in a statement. “The past two months have seen the lowest readings since the height of the global financial crisis in 2009.”

A separate PMI report from the Institute for Supply Management (ISM) showed slightly better manufacturing conditions, but not by much. The ISM manufacturing PMI weakened to 51.7 in June from 52.1 the month before.

Click here for a real-time Dow Jones Industrial Average (DJIA) price chart.

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