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By Jennifer Coombs, Research Analyst

After taking a bit of a nosedive following the pending home sales data, the major equity indices have bounced off of their intraday lows and are nearly flat for the session. Thanks to overall mixed home activity (between pending, existing, and new home sales) the industrials sector is significantly underperforming the broader market today. However, manufacturing activity is picking up in some of the nation's largest markets as we saw in the Empire State and the Philly Fed surveys, as now the Dallas Fed survey which was released this morning. The latest Dallas Fed Manufacturing Survey indicates that recent momentum in the sector is carrying over from June. Perceptions of broader business conditions were more optimistic this month, as the general business activity index edged up from 11.4 to 12.7 - this is the highest level in the past 10 months. Although there remains some perceived weakness in manufacturing, the service sector looks to be holding up well this summer.

Markit Economics released its July flash reading for the Services Purchasing Managers' Index (PMI) this morning, which is based on a monthly questionnaire from over 400 US companies in the private services sector. According to the survey, the nation's service sector continues to expand at a very strong rate, well above breakeven level of 50, at 61.0. However, this report does note that without detail, new business growth is slowing, after hitting a five-year high in June. Additionally, hiring is slowing while backlog orders are being worked down and output pricing pressure is also easing. The report also notes an easing in input price pressures to the lowest level since April of last year. Below is a chart of the final PMI readings since October 2013, with the flash reading for July indicated in dark green.

Providing a high level of disappointment this morning were the pending national home sales; overall sales were lower relative to the previous month, as well as a year ago. It seems that the housing market really cannot make up its mind. Sales of new homes were weak, but the sales of existing homes were still respectably strong. The pending home sales index, for existing home sales, came in solid at 102.7 in June; which is healthy, but down a bit from a revised 103.8 in May. The monthly percentage change, at -1.1%, is below the consensus expectation of a 0.3% gain. The regional breakdown shows a dip in the South, but a gain for the Midwest and a fractional gain for the West.