The trading session has been one big long, slow crawl to get back into positive territory as the major equity indices attempt to close out the last trading session of May 2015 better than last month. Stocks opened in the red and dropped lower after it was noted that the Q1-2015 gross domestic product (GDP) revision was well below the initial reading. In the first quarter, the US economy contracted by 0.7%, revised from a previously reported 0.2% gain. It is the first contraction in a year as harsh winter weather, a strong dollar and delays at ports hurt the economy. However, the market made a big reversal off session lows after it was reported that Greece will in fact be making its June 5^th payment to the International Monetary Fund (IMF). The NASDAQ is gaining the most ground today, and remains the strongest of the three major indices in 2015.

Aside from the disappointing GDP number, there were two other economic reports impacting the market today, although neither was strong enough to help make up lost ground. The Chicago purchasing managers index (PMI), which tracks all sectors of the Chicago economy, confirmed what the Fed district reports already noted in May – business activity in the major metro areas is still very weak. The report noted a surprising and inexplicable contraction to a reading of 46.2 which was far below the consensus estimate of 51.0 and the April reading of 52.3. All five of the index’s subcomponents came in below the 50-breakeven level, with the steepest declines in new orders, production and also employment, which is at its lowest level since April 2013. However, raw material prices made a recovery, but this is likely the fault of rising gas prices over the month of May. Given the volatile history of the Chicago PMI, it’s difficult to draw any definitive conclusions. However, this report is a red flag of some sorts, especially when economists were looking for this report to show some significant strength, not weakness.

Despite this morning’s disappointing GDP reading, consumer sentiment has made an impressive recovery in the last two weeks. The University of Michigan’s Consumer Sentiment Index rose to 90.7 from the mid-month flash reading of 88.6. For the last two weeks the implied reading is about 93, which although down from April's 95.9 and January's peak over 98, is still very solid. Nevertheless, there is still weakness on a month-to-month basis, and this doesn’t bode well for the consumer spending report for May. The current conditions component rounds out the month at a reading of 100.8, which is strong, but well below the 107.0 reading from April. This points to trouble for the May employment data. Additionally, there was a decline in the expectations component to 84.2 from 88.8 in April, which points to lower optimism for the long-term jobs outlook. Gas prices are up more than 5.0% from April with is also putting pressure on inflation expectations going into the summer. One-year expectations are up from April to 2.8%, as are 5-year expectations which show the same readings. Ultimately, the consumer reports in the week of May 25^th are pointing to stability in consumer sprits. However, the optimism peaked big-time in January, but is now leveling out.