Economic Update

Stocks started higher after the 3-day weekend but quickly fell into negative territory as investors continue to digest last week’s data and contemplate recession odds.

Economic data today shows mixed results in the services sector. The ISM services index moved slightly higher in August to 56.9 from 56.7 in July. The increase was due to growth in business activity, new orders, and employment. All 3 are increasing at a faster pace and employment is moving from contraction to expansion levels.

Meanwhile, the S&P U.S. services PMI moved further into contraction territory in August falling 3.6 points to 43.7. The decline marks the sharpest pace since May 2020 and was primarily due to the steep fall of new orders back into contractionary levels. Employment rose but at the softest pace since January as backlogs of work contracted at the fastest pace in over 2 years.

Treasury yields are higher, with the 2-year T yield up 6.6 basis points to 3.48%, the 5-year T yield up 8.5 basis points to 3.40% and the 10-year T yield up 5.9 basis points to 3.28%. Advance rates are higher across the curve. $SPDR S&P 500 ETF (SPY.US)$ $Invesco QQQ Trust (QQQ.US)$ $Nasdaq Composite Index (.IXIC.US)$ $S&P 500 Index (.SPX.US)$ $Dow Jones Industrial Average (.DJI.US)$