ISM Manufacturing PMI Misses Expectations, S&P 500 Tests New Lows

Key Insights

• S&P 500 Global Manufacturing PMI grew from 46.9 in January to 47.3 in February. 
• ISM Manufacturing PMI increased from 47.4 in January to 47.7 in February.
• Both reports missed analyst expectations, highlighting problems in the manufacturing sector of the economy. 

U.S. Manufacturing Remains Under Pressure

On March 1, traders had a chance to take a look at the final reading of the S&P 500 Global Manufacturing PMI report for February. The report indicated that Manufacturing PMI increased from 46.9 in January to 47.3 in February, compared to analyst consensus of 47.8. Numbers below 50 show contraction.

According to the report, “The deterioration in operating conditions stemmed largely from further contractions in output and new orders […] Weak domestic and foreign client demand reportedly drove a further drop in total new sales as firms adjusted their spending activity and inventory holdings down accordingly.”

Traders also focused on the ISM Manufacturing PMI data for February. The report showed that ISM Manufacturing PMI increased from 47.4 in January to 47.7 in February.

ISM noted: “Regarding the overall economy, this figure indicates a third month of contraction after a 30-month period of expansion […] the February composite index reading reflects companies continuing to slow outputs to better match demand for the first half of 2023 and prepare for growth in the second half of the year.”

S&P 500 Dives Below The 3950 Level

S&P 500 tested session lows after the release of PMI data. The reports missed expectations, highlighting recession risks. Traders remain worried that aggressive Fed policy will put too much pressure on the economy.

U.S. Dollar Index gained some upside momentum and moved above the 104.50 level. Forex traders do not believe that weaker-than-expected PMI data will have any material impact on Fed’s decision making.

Gold  made an attempt to settle above the $1840 level as demand for safe-haven assets increased. Interestingly, gold is moving higher despite rising Treasury yields.

For a look at all of today’s economic events, check out our economic calendar.