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Pre-Markets Reverse to Up Big; PMI and New Home Sales Later

Tuesday, June 23, 2020

Ahead of Tuesday’s opening bell, aside from an already cleaned-up slip of the tongue about the viability of the U.S.-China trade deal (White House Trade Director Peter Navarro had quipped “It’s over” before walking the statement back), there isn’t really much for the markets to sink their teeth into. We’re already looking at all-time highs on the tech-heavy Nasdaq and a 7-day winning streak, and pre-market trading on the Nasdaq, Dow and S&P 500 are all in the green.

Once regular trading begins, we get a look at some important productivity numbers: PMI Manufacturing and Services for the month of June. Both metrics had rebounded somewhat from all-time lows in April, but still have plenty of room to make up to get back to pre-pandemic levels.

PMI Manufacturing last month came in at 39.8 — still an historically low figure, but bouncing off April’s 36.1, which was the lowest read in this survey’s history. New business has remained negative for three straight months. For some perspective, back in 2015 we saw highs in the 57 range. Manufacturing lost some steam during the prolonged U.S.-China trade war in 2019, but then fell off the table once the pandemic hit.

PMI Services bounced to 37.5 in May from 26.7 in April. Again, highs came back in 2015 when the post-Great Recession engine really got going; the all-time high read was 61. This survey goes back to 2013.

Also during the regular trading day today, we get New Homes Sales for May. Expectations are for an increase to around 650K from the 623K reported in April, which itself rose unexpectedly from March: +0.6% versus the -21.9% plunge expected. Still, we are expected to be well off the 700K+ pace we enjoyed this past winter. The historic peak in New Home Sales came in the mid-2000s, on the brink of the mortgage-backed financial crisis that led to the Great Recession. This survey’s all-time high was 1.389 million units in a month.

Meanwhile, the reopening of the U.S. economy continues, even as the rise of coronavirus cases spikes in roughly two dozen states, largely in the South and West. However, with proper social distancing, facemasks and mindful sanitary hygiene, Americans appear confident we can continue climbing out of our deep hole. Certainly the stock market is betting we will.

Mark Vickery
Senior Editor

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