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Afternoon Note

Rally Stalled

By Charles Payne, CEO & Principal Analyst
5/1/2019 1:14 PM

The market rally stalled with the release of Manufacturing and Construction data that missed Wall Street consensus.  Most worrisome is the ISM Manufacturing Report that reveals a continued sharp decline in manufacturing.  It’s still in expansion mode, but components have trickled into contraction, and several are at multi-year lows.

ISM Manufacturing Five-Year Chart 

In the past, the Federal Reserve has reacted to weakening ISM data with a rate cut, and certainly this latest read on manufacturing will add to the argument the Fed should be considering lower rates.  It’s not going to impact today’s decision, but it’s a sign the moat around the U.S. economy is being challenged when it comes to manufacturing weakness.

Market Internals

Apple (AAPL) is leading Technology higher; although, there is some weakness in chip names.

Netflix (NFLX) is leading Communication Services higher, which is intriguing given there was good news from HULU on subscriber growth.  Interestingly, the sector is holding up despite another tough session for Alphabet (GOOGL/GOOG).

S&P 500 Index

+0.10%

 

Communication Services (XLC)

+0.48%

 

Consumer Discretionary (XLY)

+0.02%

 

Consumer Staples (XLP)

 

-0.19%

Energy (XLE)

 

-0.79%

Financials (XLF)

 

-0.34%

Health Care (XLV)

+0.07%

 

Industrials (XLI)

+0.27%

 

Materials (XLB)

 

-0.52%

Real Estate (XLRE)

+0.50%

 

Technology (XLK)

+0.96%

 

Utilities (XLU)

 

-0.89%

Crude Oil reserves continue to pileup building on the trend that began last September.  Consequently, Energy is today’s weakest sector.


 

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