Latest Economic News is a Mixed Bag

The latest economic news out today is a bit of a mixed bag. Consumer spending fell 0.2% in April from March, the first decline since May 2012. Economists were expecting an increase of 0.1%. Personal income was unchanged for the month, compared to expectations of a 0.1% advance.

Data Summary

A reading on consumer sentiment from Thomson Reuters and the University of Michigan came in at 84.5 in late May, up from 83.7 earlier in the month, and besting economists’ expectations that it would hold steady. The gauge is now at its highest level since July 2007.

The Institute for Supply Management-Chicago’s PMI gauge jumped to 58.7 in May from 49.0 the month before, surpassing economists’ forecasts of 50. Readings above 50 point to expansion in the Midwest manufacturing sector, while those below indicate contraction.

The markets were looking for a signal to give them an idea of which direction to move in on Friday, as traders parsed through mixed data on the U.S. economy.

Today’s Markets

As of 9:52 a.m. ET, the Dow Jones Industrial Average rose 5.8 points, or 0.03%, to 15329, the S&P 500 gained 0.07 point, or 0.00%, to 1655 and the Nasdaq Composite advanced 0.14 point, or 0.11%, to 3491.

The old adage “sell in May and go away” seemed to have little effect on Wall Street this month. The Dow and S&P 500 have both climbed more than 3%, while the Nasdaq inreased close to 5%. It would mark the first May gain for the Dow and S&P in four years, and mark the seventh-straight monthly advance for the S&P 500.

Improvements across the U.S. economy – from the labor market to housing – coupled with generally upbeat corporate earnings helped drive the market push. Still, however, tensions have increased toward the end of the month that as the economic picture brightens, the Federal Reserve may be forced to take its foot off the economic accelerator.

At least, that is what the Fed is publicly stating to be the reason.

Traders Get Mixed Data

The Commerce Department said that consumer spending fell 0.2% in April from March, the first decline since May 2012. Economists were expecting an increase of 0.1%. Personal income was unchanged for the month, compared to expectations of a 0.1% advance.

Goldman Sachs (GS) sliced its estimate for how much the U.S. economy will expand in the second quarter by 0.2 percentage point to 1.8% on the back of the disappointing data.

Balancing that out, however, the Institute for Supply Management-Chicago’s PMI increased to 58.7 in May from 49.0 the month before, surpassing economists’ forecasts of 50. Readings above 50 point to expansion in the Midwest manufacturing sector, while those below indicate contraction.The more closely-watched national ISM report is due out next week.

Reuters and the University of Michigan provide the latest data from their survey on consumer sentiment. Economists expect sentiment to have held steady in late May from earlier in the month.

In the commodities market, oil prices slumped after the Organization of Petroleum Exporting Countries said it will hold its production quota at 30 million barrels a day, generally matching expectations. The benchmark U.S. contract slumped 77 cents, or 0.83%, to $92.82 a barrel. Wholesale New York Harbor gasoline dipped 0.17% to $2.808 a gallon. Gold edged lower by 90 cents, or 0.06%, to $1,411 a troy ounce.

Dell (DELL) filed a proxy with the Securities and Exchange Commission, once again urging shareholders to vote for a go-private plan by founder Michael Dell and private-equity player Silver Lake Partners.

Foreign Markets

The Euro Stoxx 50 fell 0.7% to 2780, the English FTSE 100 sold off by 0.91% to 6596 and the German DAX slumped 0.7% to 8342.

In Asia, the Japanese Nikkei 225 rebounded 1.4% to 13775 and the Chinese Hang Seng tilted lower by 0.41% to 22392.