S&P 500 and Nasdaq See Significant Gains Ahead of Tesla Earnings Announcement

The latest data released on Tuesday has raised concerns about the strength of the US economy, as the S&P Global’s flash US composite PMI hit its lowest level in four months. The April reading of 50.9 was below economists’ expectations and marked a decline from the previous month.

According to S&P Global Market Intelligence chief business economist Chris Williamson, while a reading above 50 still indicates growth, the drop in the composite PMI suggests a “little bit of a wobble” in economic activity at the start of the second quarter. This comes after a strong first quarter, with business confidence hitting a 20-month high in January before dropping to its lowest level since November.

The report also revealed a decline in new orders for the first time in six months and a reduction in employment for the first time in nearly four years. Williamson attributed the decrease in business expectations to changing perceptions of monetary policy, as markets have adjusted their expectations for interest rate cuts from the Federal Reserve.

The shift in expectations has led to a significant increase in Treasury yields, tightening financial conditions and potentially dampening sentiment. Williamson highlighted the impact of this on demand, noting that businesses may be readjusting their strategies in response to the new rates environment.

As the second quarter progresses, all eyes will be on how the economy responds to these challenges and whether the momentum seen in the first quarter can be sustained.