Stocks are trading mixed early Tuesday as Dow and S&P traders take a breather after posting solid gains the first two days of the new month. The NASDAQ, however, continues to be the leader of the group, moving to a new all-time high shortly after the opening.
Equities have been on a tear since mid-May when the Fed minutes indicated the central bank would allow inflation to move above the central bank's mandate of two-percent. This suggested the central bank would not be as aggressive with future rate hikes.
Investors were also impressed by last Friday's May Non-Farm Payrolls report which indicated strong economic growth and a healthy workforce.
The "risk-on" price action continued on Monday and early Tuesday as investors shrugged off talk of a potential trade war.
The primary driver of the price action in the market has been the NASDAQ Composite. It is being supported by strong demand for the FANG stocks - Facebook, Amazon, Netflix and Google - which investors believe will be immune from any fallout from a trade war. Investors also drove the small-cap Russell 2000 Index higher for the same reasons.
U.S. Economic Reports
Earlier today, investors had the opportunity to react to several fresh U.S. economic reports including Final Services PMI, ISM Manufacturing PMI and the JOLTS Job Openings report.
The major report was ISM Manufacturing PMI. It showed growth in U.S. non-manufacturing increased in May, reaching a 100-month streak of overall expansion.
The Institute of Supply Management's measure of the non-manufacturing sector grew to 58.6 from 56.8 in April, beating a forecast of 57.6 by a survey of Thomson Reuters analysts.
"The majority of respondents are optimistic about business conditions and the overall economy," said Chair of the Institute for Supply Management Anthony Nieves. "There continue to be concerns about the uncertainty surrounding tariffs, trade agreements and the impact on cost of goods sold."
U.S. Treasury Markets
Despite the solid ISM Manufacturing PMI data, U.S. government debt yields were lower on Tuesday. The yield on the benchmark 10-year Treasury note was lower at around 2.913 percent, while the yield on the 30-year Treasury bond was down to 3.064 percent.
Lower Treasury yields aren't hindering U.S. Dollar bulls on Tuesday with the June U.S. Dollar Index moving back towards a six-month high reached last week. Traders said investors are paying more attention to an easing of concerns over a possible trade war. However, the move is actually being fueled by a lower Euro and some giveback in the commodity-linked Australian and New Zealand Dollars.
Dollar traders are also taking a breather ahead of this week-end's G-7 meeting on the hopes that the economic powers attending the conference will work out their trade differences with the United States.
This article was originally posted on FX Empire
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