- ISM rectifies, revises PMI higher
- Long-term Treasury yields rise
- Airlines lead gains
Dow Jones Industrials: 0.07%
Nasdaq Composite: -0.30%
S&P 500: -0.02%
US stocks changed course and cut their intraday losses after the Institute for Supply Management (ISM) issued a rectification of manufacturing sector survey data, released earlier in the day, which showed that activity in the sector actually increased in May, instead of contracting.
The Institute for Supply Management initially said its manufacturing index fell to 53.2 last month from 54.9 in April, missing analysts' expectations of 55.5.
Later in the day it was forced to rectify saying that the PMI had in fact risen to 56, after finding that it had applied the incorrect seasonal adjustment factors.
"What a mess at the ISM. Perhaps they should invest in some new quality control procedures", wrote Robert Wood at Berenberg Bank in reaction to the news.
"The economy is on track to recover very strongly in the second quarter," Wood added.
The survey results followed China's manufacturing PMI which rose to 50.8 in May from 50.4 in April, according to figures from the National Bureau of Statistics and China Federation of Logistics and Purchasing yesterday, the strongest figure since December. Economists had pencilled in a reading of 50.7.
Meanwhile, Chicago Federal Reserve President Charles Evans warned today that using monetary policy tools to head off financial instability implied risks.
"Degrading monetary policy tools to mitigate financial instability risks would lead to inflation below target and additional resource slack," Evans warned in a macro workshop organised by the Central Bank of Turkey in Istanbul.
He added that the current accommodative monetary policy "seems appropriate" and that wage growth is stable.
Nevertheless, he believes US inflation will remain low for some time and that it is expected to remain under the 2% Fed target.
However, Evans also noted that while 2% is the target, it should not be interpreted as a ceiling.
Airlines lead gains
Ventas declined as the US healthcare real estate investment trust agreed to buy American Capital Healthcare Trust for $2.6bn and 29 independent senior housing communities in Canada from Holiday Retirement for c$980m.
Broadcom Corp. advanced after the maker of communications chips said it will explore strategic options for its cellular baseband business, including a possible sale.
From a sector standpoint the best performance was to be seen in the following industrial groups: Airlines (1.77%), Industrial supplies (1.51%) and Life insurance (1.35%).
Treasury yields reverse course and rise
The yield on 10-year Treasuries rose six basis points to 2.54%.
West Texas Intermediate crude futures fell 0.55% to $102.15 per barrel on the NYMEX.