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Wall Street Strategies has been providing independent stock market research since 1991 to individual, retail and institutional clients through a balanced approach to investing and trading. Charles Payne, our founder and chief analyst, is routinely sought after for his stock market, political,... More
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    Aug 5, 2013 2:05 PM

    By Carlos Guillen

    Equity markets started today's trading session sharply lower as investors continued to digest Friday's employment data that was overall worse than expected and confused investors as to the direction of Fed tapering. On the brighter side of things, some economic data from here at home and from abroad has helped mitigate some of today's market action.

    Perhaps serving to keep markets from sinking further today was better than expected non-manufacturing sector data. Similar to data from the Institute for Supply Management (ISM) this past Thursday that showed U.S. economic activity in the manufacturing sector (PMI) expanding at an accelerating rate in July and landing much higher than expected, ISM data posted today showed that economic activity in the non-manufacturing sector (NYSE:NMI) expanded during the same time period, reversing its direction from the prior month. The Non-manufacturing ISM Index in July clocked in at 56.0 percent, increasing from the 52.2 percent reported for June and landing above the 53.2 percent consensus estimate. The result represented the 48th month of consecutive growth. Perhaps a bit discouraging was that employment activity in the non-manufacturing sector decreased to 53.2 from 51.7 percent, indicating growth in employment for the twelfth consecutive month, but at a slowing pace. Of the 18 available components of NMI, sixteen non-manufacturing industries reported growth In July.

    (click to enlarge)

    Also helping stocks today was some better-than-expected data from China and Europe. In particular, the non-manufacturing PMI reading for China improved to 54.1 in July from 53.9 in June while the non-manufacturing PMI reading for the euro zone ticked up to 49.8 from 49.6. Given that 50 demarks the division between expansion and contraction, investors have been a bit relieved that China's services sector isn't slowing down and that the contraction in the euro-zone is slowing. The rest of this week promises to be light in term of economic drivers, but earnings season in not over, so expect to see some rather sharp swings in market action.


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