By IFCMarkets

Better US data bullish for SP500

US economic data in the last couple of weeks were not as bad as feared. US Institute for Supply Management (ISM) report showed its manufacturing index rose to 43.1 in May from an 11-year low of 41.5 in April . And the ISM’s non-manufacturing PMI came in at 45.4 in May, above the consensus forecast of 44.7. Readings above 50.0 indicate sector expansion, below indicate contraction. Furthermore, data from Automatic Data Processing showed private sector employers cut 2.76 million jobs in May, following a decrease of 20.2 million in April. Analysts had expected a drop of 9 million. The better than expected economic data undoubtedly were result of stimulus measures which were expanded in the last couple of months. Thus, a supplementary stimulus package, named Phase 3.5, was signed into law on April 24, 2020 appropriating $484 billion, mostly to replenish the Paycheck Protection Program (PPP) and expanded Economic Injury Disaster Loan (EIDL), and contains additional funding for hospitals and COVID-19 testing. The fiscal and monetary stimulus programs by the Federal Reserve buoyed investors’ confidence, propping the equity market. At the same time the more closely watched Labor Department employment report will be released Friday, and official data painting a picture worse than the one ADP reported is an immediate downside risk for SP500.

Summary of technical analysis

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