Monday Morning Musings
Stocks are pulling back in early trading on the heels of some weaker economic data, both here and abroad, as well as some profit taking after last week's runup.
The ISM manuf. index for May fell to 53.2 from 54.9. Consensus expectations were for a rise in the ISM following the strong Chicago PMI we saw recently.
There isn't a lot of other market moving corporate news this morning.
Asia was mixed overnight, with China and Hong Kong markets closed. China's PMI rose to 50.8 from 50.4, and Japan's PMI rose to 49.9 from 49.4. Although China's PMI rose, its export component contracted for the 2nd month in a row.
Europe's markets are slightly higher today. The Eurozone manuf PMI fell to 52.5 from 52.5. France and Spain improved while Germany, Italy, and Great Britain slid. But all eyes will be on the ECB later this week for their upcoming policy meeting where they are expected to announce some sort of monetary stimulus plan.
The 10-year yield is getting a bounce today and back above the 2.50% level to 2.51% so far.
The volatility index is also bouncing from low levels, up nearly 6% so far to 12.05.
Oil prices are slightly lower to $102.42 and gold prices are also a bit weaker near $1245.
Trading comment: The breakout in the S&P 500 last week above 1900 was a bullish event, including the fact that the market didn't reverse from those levels. We think the breakout holds for the intermediate-term and would look to use the 1900 level in the SPX as buying support. Leadership has narrowed somewhat from the biotech and social media stocks, but there are still lots of stocks making new highs from various other industries that are worth a look.