On October 24, S&P Global released flash readings of PMI reports for October. The reports indicated that Manufacturing PMI improved from 49.8 in September to 50 in October, compared to analyst consensus of 50.
S&P Global commented: “The overall upturn was supported by expansions in activity at manufacturers and service providers at the start of the fourth quarter. Production at manufacturing firms rose at the quickest pace since April, while output growth at service sector firms was the fastest in three months.”
The better-than-expected PMI data shows that the economy remains strong despite rising interest rates. This is a problem for the Fed that wants to put some pressure on the economy to fight inflation.
U.S. Dollar Index tested session highs at 106.20 after the release of PMI reports. Traders bet that Fed will be forced to stay hawkish due to the strength of the economy.
Gold settled below the $1965 level as traders focused on stronger dollar. In addition, demand for safe-haven assets is declining amid hopes that Israel – Hamas conflict will not spread to other countries in the Middle East.
SP500 moved towards the 4250 level as traders reacted to the better-than-expected reports. The economy remains in a decent shape, which is bullish for stocks.
Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.