Chicago PMI Declines to 46.9, Failing to Meet Analyst Forecasts

The markets remain peaceful as traders get ready for the upcoming year.  

Highlights

• The Chicago PMI dropped from 55.8 in November to 46.9 in December.
• The S&P 500 continues to be stagnant below the 4800 mark as traders are hesitant to make significant moves on the final trading day of the year. 
• The U.S. dollar is declining following the publication of the unsatisfactory report.  

On December 29, the Institute for Supply Management released the Chicago PMI report, which revealed a decrease from 55.8 in November to 46.9 in December, falling short of the analyst consensus of 51. Readings below 50 indicate contraction.

After briefly reaching 55.8, the Chicago PMI has reverted back below the significant 50 level. It is worth noting that the Chicago PMI remained below 50 for 11 out of 12 months. Analysts were more optimistic, but it appears that the previous reading was an anomaly, and the overall trend remains unchanged.

Following the report's release, the U.S. Dollar Index retreated towards the 101.20 level. The weaker-than-expected data exerts some bearish pressure on the U.S. dollar. With no other significant reports to consider, traders will remain focused on the Chicago PMI during the final trading session of the year.

Gold stayed near the $2060 level. Although a weaker dollar is favorable for gold, rising Treasury yields have limited the gold market's ability to test new highs leading into the new year.

The S&P 500 settled below the 4800 level in response to the Chicago PMI report. It remains uncertain whether bulls will be able to drive the S&P 500 above the 4800 level as many traders are on vacation and will return to their desks at the beginning of 2024.