Dow Hits Record as Manufacturing Data Signals Economic Weakness
While the Dow Jones reached record highs Thursday despite rising oil prices and Treasury yields, underlying economic data including weak manufacturing and lower housing starts point to growing economic headwinds from the Iran conflict.
Record Dow but Diverging Signals
The Dow Jones Industrial Average rose to a record close Thursday as oil prices and Treasury yields were volatile, with the blue-chip index gaining 276.31 points, or 0.55%, for a closing record of 50,285.66. However, broader economic signals remain mixed.
Manufacturing Weakness
The Philadelphia Federal Reserve's manufacturing index slid to -0.4 for May, down from 26.7 in April and missing the estimate for 19.0. This sharp contraction indicates significant weakness in the factory sector.
Housing Data Mixed
Housing starts in April totaled a seasonally adjusted annual rate of 1.465 million, 2.8% below March but above the forecast for 1.42 million. Building permits totaled 1.442 million, 5.8% above March and better than the 1.39 million forecast.
Oil and Yields Drive Market Volatility
West Texas Intermediate futures declined almost 2% to close at $96.35 per barrel. Brent crude dropped more than 2% to close at $102.58 per barrel. Crude prices initially jumped after Reuters reported, citing sources, that Iran's supreme leader issued a directive to keep enriched uranium within the country — further complicating the outlook to a resolution to the U.S.-Iran war.