U.S. PMI Reports Exceed Analysts' Predictions.

Key Highlights

• Manufacturing PMI rose from 49.8 to 50.
• Services PMI increased from 50.1 to 50.9.
• Composite PMI advanced from 50.2 to 51.

On October 24, S&P Global released preliminary PMI reports for October, which showed improvement in the Manufacturing PMI from 49.8 in September to 50 in October, slightly below the analyst consensus of 50. The Services PMI also increased from 50.1 to 50.9, and the Composite PMI grew from 50.2 to 51. Any value above 50 indicates an expansion.

According to S&P Global, this overall improvement was supported by expansions in both manufacturing and service sector activities at the beginning of the fourth quarter. Production at manufacturing firms increased at the fastest rate since April, while output growth in the service sector was the strongest in three months.

The unexpectedly positive PMI data suggests that the economy remains robust despite the rising interest rates. This poses a challenge for the Federal Reserve, which aims to apply some pressure to the economy to combat inflation.

Following the release of the PMI reports, the U.S. Dollar Index reached session highs at 106.20. Traders are speculating that the Fed will need to maintain a hawkish stance due to the economy's strength.

Gold prices settled below the $1965 level as traders focused on the stronger dollar. Additionally, the declining demand for safe-haven assets reflects optimism that the Israel-Hamas conflict will not spread to other countries in the Middle East.

The S&P 500 approached the 4250 level as traders responded to the better-than-expected reports, indicating that the economy remains healthy, which is positive for stock markets.