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Published: May 16, 2023, 14:25 UTC•1min read
Markets are choppy as traders stay focused on debt ceiling negotiations.
Key Insights
- Industrial Production grew by 0.5% in April.
- Manufacturing Production increased by 1% in April.
- Business Inventories declined by 0.1% in March.
Industrial Production Growth Beat Analyst Estimates
On May 16, U.S. released Industrial Production report for April. The report indicated that Industrial Production increased by 0.5% month-over-month, compared to analyst consensus of 0%. On a year-over-year basis, Industrial Production grew by 0.2%.
Manufacturing Production has also exceeded expectations, rising by 1% on a month-over-month basis, compared to analyst consensus of +0.1%. It should be noted that growth rates for both February and March were revised down 0.3 percentage point. On a year-over-year basis, Manufacturing Production declined by 0.9%, compared to analyst forecast of -2.3%.
Traders also had a chance to take a look at the Business Inventories report for March, which showed that Business Inventories declined by 0.1% compared to analyst consensus of 0%.
Gold Pulls Back Towards The $2000 Level
U.S. Dollar Index gained ground after the release of the better-than-expected Manufacturing Production data. Treasury yields are moving higher, providing additional support to the American currency.
SP500 is trying to settle below the support level at 4115. Traders are cautious as debt ceiling negotiations continue. The weaker-than-expected Retail Sales report served as an additional bearish catalyst for SP500.
Gold is moving towards the $2000 level as traders focus on stronger dollar and rising Treasury yields. Interestingly, debt ceiling worries do not provide additional support to gold markets in today’s trading session.
For a look at all of today’s economic events, check out our economic calendar.
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The US stock market was put through its paces on Tuesday, with the S&P 500 Index testing session-lows as manufacturing production exceeded expectations.
The S&P 500 closed 0.8% lower on Tuesday, a day marked by uncertainty and choppy trading. Manufacturing production surged 0.5% in June as factory output rebounded from the prior month’s slump. The reading was better-than-expected and a sign that the economic resurgence is continuing; however, traders’ focus was on the potential for more government stimulus, with the negotiations between Republicans and Democrats having stalled.
The broader markets were mixed, dragged lower by a downgrade in unemployment claims and investor concern over the timing of further government assistance. Despite the disappointing numbers, the Dow Jones Industrial Average climbedby as much as 179 points intraday before settling higher by 16 points.
It has been a volatile week in equities, which commentators attribute to the state of flux the markets are in as investors process the nature of the economic recovery. As well as the lack of a new stimulus package, the EU–UK trade tensions weighed on the sentiment, particularly for stocks in the travel and leisure sectors.
Today’s trading session saw a slight uptick in the market’s losses, a reaction to the manufacturing report. Although the data supports an optimistic view of the post-pandemic recovery, investors remain cautious in the face of the on-going negotiations between Democrats and Republicans.
The improving production figures suggest that the recovery is continuing to gain traction, but until a new stimulus package is agreed, stock markets may remain confined to their current ranges.
