Stocks advanced yesterday, trading near session highs in afternoon action, after a volatile morning that saw benchmarks flipping between gains and losses as investors digested a round of conflicting economic data that showed strength in the U.S. services sector but signaled a potential weakening of the labor market.
A periodic examination of the US economy done by the Fed known as the Beige Book was released yesterday and it was a bit more upbeat compared to the previous report. The U.S. economy expanded at “a modest pace overall” from April to mid-May, but growth was partly held in check by labor shortages and worries over tariffs on China, the Federal Reserve said. The Fed also left the door open to cut interest rates later in the year.
The service side of the U.S. economy that employs the vast majority of Americans grew faster in May and executives said they were “mostly optimistic” despite worries about trade tariffs and a shortage of skilled workers. An index of service-oriented companies such as banks, restaurants and computer developers rose to 56.9% last month from a two-and-a-half-year low of 55.5% in April.
The price of Crude Oil has officially entered a bear market, falling 22% since reaching a high in April. A combination of rising U.S. inventories, trade war concerns and economic fears are trumping the supply-side factors.