Dallas Fed Manufacturing Index Misses Expectations, SP500 Retreats From Session Highs

Key Insights

• Dallas Fed Manufacturing Index declined from -13.5 to -15.7, missing analyst expectations.
• Dallas Fed Production Index improved from -2.8 to 2.5.
• SP500 pulled back after an unsuccessful attempt to settle above the 4000 level. 

Dallas Fed Manufacturing Index Declined In March

On March 27, the Dallas Fed released its Manufacturing Index report, which indicated that Manufacturing Index declined from -13.5 in February to -15.7 in March, compared to analyst consensus of -10.

Dallas Fed Manufacturing Index has been in the negative territory for 11 months. The low of -22.6 was reached in July 2022.

The Production Index moved from -2.8 to 2.5, while New Orders Index declined from -13.2 to -14.3. According to the report, “Texas factory activity expanded slightly in March after contracting in February […] Perceptions of broader business conditions continued to worsen in March.”

SP500 Pulls Back From Session Highs After Dallas Fed Manufacturing Index

SP500 continued to pull back from session highs after the release of the Dallas Fed Manufacturing Index report. Today, SP500 made an attempt to settle above the important 4000 level, but this attempt was not successful. The Dallas Fed Manufacturing Index may serve as an additional bearish catalyst for SP500 as it reminds traders that some parts of the economy remain under pressure.

U.S. Dollar Index remains stuck near the 103 level. Treasury yields rebound, but this move does not provide enough support to the American currency. Traders stay focused on the developments in the banking sector. Shares of regional banks are moving higher so demand for safe-haven assets declines, which is bearish for the American currency. The Dallas Fed Manufacturing Index report should not have a material impact on currency dynamics in the current market environment.

Gold continues its attempts to settle below the $1950 level amid declining demand for safe-haven assets. Gold traders will likely ignore Dallas Fed Manufacturing Index data and focus on the dynamics of Treasury yields.

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