US equity markets struggled to find direction during the first hour of trading today, as the release of more positive American economic data lifted the market’s short-term interest rate expectations.
The Institute for Supply Management’s Chicago Purchasing Managers Index, an important barometer for business activity, rose to a reading of 60 in December from 56.1 the prior month – beating Bloomberg’s median estimates of a drop to 55.1.
The unexpected rise in the Chicago Purchasing Managers Index left the market feeling as if the Federal Reserve may raise interest rates ahead of schedule today.
This helped the US dollar advance and metal prices retreat, which unsurprisingly weighed on the heavyweight mining sector.
Shares of Vista Gold sank 2.5% to $2.39 on the AMEX, while Southern Copper retreated 1% to $32.61 on the NYSE. Newmont Mining fell 0.8% to $47.39 while Freeport-McMoRan Copper & Gold edged 0.2% lower to $80.96.
By around 3:30pm (London time) the Dow Jones Industrial Average traded 0.53 points (+0.01%) higher at 10545.94 while the broader S&P 500 was 1.16 points (-0.10%) lower at 1125.04.
The VIX, which is the Chicago Board Options Exchange Volatility Index, was marginally higher, meanwhile. The volatility gauge traded 1.3% higher at 20.3.
US airline carriers were trading in negative territory as well this afternoon after Japan Airlines fell to a record low overnight over fears it is heading for bankruptcy.
Southwest Airlines sagged 1.2% to $11.29, US Airways saw its share price fall 2% to $4.75, while Delta Air Lines declined 1.4% to $11.17.
Financials were out of favour as well this afternoon, with Citigroup down 1.2% to $3.33 and Bank of America 0.6% lower at $15.03. Morgan Stanley was also trading a notch lower at $29.4 on news that a Virgin Islands pension fund is suing the group.
Bucking the negative trend was Nasdaq-listed staffing services and solutions company KForce, which rallied 14.2% to $13.1 after the Department of the Interior announced the company was now authorised to enter into new and renewed federal business following a suspension.
Broadcom, provider of semiconductors for wired and wireless communications, was also en vogue, up 1.6% to $31.8, after announcing it will pay out only $160 million to settle a class action lawsuit relating to stock option backdating. The company did not admit to any wrongdoing.
By Anthony Grech - Reseach Analyst, IG Index.
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