Economic Concerns Once Again Bear Down on the Indexes
Good day! Wednesday's session was a harsh pill to swallow for the bulls, especially on the heels of Tuesday's post-holiday euphoria. Concerns over the dire circumstances underpinning the U.S. economy was once again brought to the foreground with the latest data. Unlike Tuesday, when the market brushed off weak data, the indexes took a beating on Wednesday in the worst single day of selling that the Dow Jones Ind. Average ($DJI) and S&P 500 ($SPX) have seen since June and April, respectively, of last year.
June is typically a difficult month for the market, but this one was off to an even worse start than usual. Historically, the market is flat or down over 70% of the time in June, and tied with the weak data, this one is going to be a struggle as well. The Institute for Supply Management announced that its manufacturing index fell from 60.4 in April to hit 53.5 in May. This was well below analysts' expectations of a reading of 57.6 and was the largest one-month drop since 1984.
The initial jobs data this week was also discouraging. Although Friday's nonfarm payrolls report on Friday will be the most heavily followed, Tuesday's ADP employment report stated that companies added 38,000 jobs in May. Economists were expecting to see growth to the tune of 170,000 positions.
Dow Jones Industrial Average
In housing news, the Mortgage Bankers Association reported that its index of mortgage applications fell nearly 4% last week. Refinancing fell 5.7%.
Meanwhile, construction spending was up slightly by 0.4%, but was revised lower by 1.3% the previous month from a 1.4% gain to a mere 0.1% gain.