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Market participants took the opportunity to cash in a few chips today. We’re just one trading day out from Memorial Day weekend, which brings us to unofficial summer and the lower trading volume that often takes place over this period of time. The Dow, S&P 500 and the small-cap Russell 2000 are all now down over the past week. Only the Nasdaq remains aloft. The Dow sold off -605 points today, -1.53%, while the S&P dropped -0.74%, the Nasdaq -0.39% and the Russell a somewhat painful -1.79%.

Clearly, the market is not desperate to attain new highs just yet. Long weekends have a way of breaking global news that may impair markets in some respect, so the safest course of action is to realize some gains after another fine showing from NVIDIA (NVDA - Free Report) in Q1 earnings yesterday. The world’s top graphics chips maker provided more evidence that the AI-based marketplace is primed for making lots more money, even at these lofty valuations. It’s a cozy market, but we don’t need to oversleep on it.

S&P flash PMI numbers were released earlier this morning. After the open, PMI Services for May came in better than expected: 54.8 versus 51.6 expected, and the fastest private services growth in at least a year. We’d seen a gradual decline over the previous three months — still north of the 50-mark, but drifting toward autumn of 2023 levels. We’ll see if this can be sustained beyond apparent seasonality; after all, 2023 posted strong May, June, July PMI Services (think summer vacations) as well.

PMI Manufacturing also performed better than expected. Its May headline of 50.9 was nearly a full percentage point ahead of the 50 consensus. This 50 is also the revised Manufacturing PMI number for April, down from the originally posted 51.1. In any case, heading north from the 50 breakeven point is good for the Manufacturing sector as well. We know this space has faced plenty of uphill battles in its recent past. Basically, healthy goods-producing equals a better domestic economy.

New Home Sales, on the other hand, fell. Today’s April report tallied 634K new homes sold, below the 675K estimates and the prior print’s non-adjusted 665K. These are seasonally adjusted, annualized units but nevertheless show last month to be the weakest since February’s 631K and November of last year’s 611K. But rumblings about currently being in a housing recession are likely to continue after this report. We haven’t seen a month with as many as 700K new homes sold since July of last year, after a huge spike around Halloween of the 2020 Covid year.

Tomorrow we’ll get new Durable Goods Orders for April. These are expected to fall month over month, from a robust +0.9% in March to -0.5% in Friday’s morning’s print. We’ll also see final Consumer Sentiment for May, which is expected to tick up slightly month over month to 67.6. We expect more evidence that nothing is burning up into the stratosphere (expect NVIDIA and AI, but they can justify it) and nothing is crumbling into rubble. Still one more trading day before the long weekend.

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