Stocks Jump, Gold Melts Down on PMI Data
Stocks reacted favorably to the Chicago PMI report, which registered a 48.2, trumping consensus estimates of 46.0 percent. The news triggered a six-point jump in e-mini S&P futures and Gold futures pared earlier gains, as the precious metals market loses some of its luster as a safe haven. Signs that economic conditions are improving could have a negative impact on Gold, as traders have priced in further rate cuts, which may not be necessary to stimulate the economy. While the report was better than expected, it still indicates that the economy is contracting, but perhaps at a slower pace than previously thought. Traders will keep a close eye on tomorrow’s release of the ISM Manufacturing Index, which could offer further confirmation that economic conditions will be improving. If the ISM report contradicts the PMI report, today’s data could simply be taken as a slight regional improvement.
Rob Kurzatkowski, Commodity Analyst
