The ISM Manufacturing PMI Surpasses Analyst Predictions

Key points:

• In September, the ISM Manufacturing PMI rose from 47.6.
• While the S&P Global Manufacturing PMI also increased from 47.9 in August. 
• At the same time, gold prices reached new lows due to traders' attention being drawn to a stronger dollar and rising Treasury yields.  

The Institute for Supply Management unveiled its report on the ISM Manufacturing PMI for September on October 2. This report revealed an improvement in the PMI from 47.6 in August to 49 in September, surpassing the analyst consensus of 47.7. A PMI below 50 indicates a contraction. The New Orders Index also rose from 46.8 in August to 49.2 in September, while the Production Index increased from 50.0 to 52.5.

The Institute for Supply Management remarked that the U.S. manufacturing sector sustained its contraction albeit at a slower pace, presenting its strongest performance since November 2022. Companies are still managing outputs judiciously as order softness persists, but the month-over-month improvement in September is undoubtedly a positive development.

On the same day, traders also had the opportunity to review the final reading of the S&P Global Manufacturing PMI report for September, which demonstrated an increase from 47.9 to 49.8, surpassing the analyst consensus of 48.9.

Following the release of the better-than-expected Manufacturing PMI reports, Treasury yields have surged, and bond traders are focused on the hawkish stance of the Fed. The U.S. Dollar Index reached new highs as traders responded to bond market developments.

Gold markets continue to face significant pressure as high yields and a strong dollar weigh on precious metals. Currently, gold is attempting to settle below the $1830 level.

The SP500 settled near the 4290 level as traders reacted to the PMI reports. The Fed policy outlook remains the primary driver for stocks. It is uncertain whether the PMI reports will lend support to major indices as Treasury yields continue to rise.