PMI Test Ahead: Bulls Face a Reality Check

US equity markets enter a key test as investors await January PMI data, which could determine whether the recent rally has enough fundamental support to continue.

PMI in Focus: Growth Must Hold

The main event for markets today is the release of January Purchasing Managers’ Index (PMI) data from S&P Global.

Consensus expectations point to the manufacturing PMI holding steady at 51.8, unchanged from December. Investors are watching closely to confirm that expansionary momentum remains intact and industrial demand stays resilient.

Services PMI is expected to rise from 52.5 to 53.0. A stronger-than-expected reading would reinforce confidence in domestic demand, support cyclical sectors and improve overall risk appetite.

Consumer Sentiment: Likely a Secondary Driver

The final January reading of the University of Michigan consumer sentiment index will also be published. If the data comes in broadly in line with expectations, market reaction is expected to remain muted.

Market Setup: Consolidation, Not Distribution

Equity futures are trading slightly higher, reflecting a neutral-to-cautious tone ahead of the PMI release.

The post-earnings pullback in Intel shares appears company-specific and is unlikely to spill over into the broader semiconductor space. Overall market balance remains neutral, with moderate volatility.

Key levels to watch for the S&P 500 remain in the 6870–6970 range.

What Happened Last Session

US equity indices finished the previous session higher. The S&P 500 closed firmly above the 6900 level, once again approaching its all-time high zone.

The Nasdaq ended near 25,500, holding above its 50-day moving average and forming a short-term consolidation pattern.

Today’s Price Action

S&P 500 futures continue to trade within a medium-term ascending channel, maintaining support above 6900.

Nasdaq futures, after a recent rebound, are hovering near a local trendline, with 25,500 acting as a key support level.

Key Macro Drivers

• January PMI data for manufacturing and services.
• US Q3 GDP growth came in stronger than expected at 4.4%.
• Core PCE inflation for November met expectations at 2.8%.
• Market sentiment has improved following delays in tariff decisions and a reduction in short-term political risks.
• University of Michigan consumer expectations and inflation outlook are due later today.

Sector Performance

Cyclical sectors showed mixed performance. XLY and XLF led gains, while ITA and XLRE lagged.

Growth-oriented sectors moved higher alongside the broader market, with leadership from TAN, MJ, SKYY and IBB.

Defensive sectors underperformed. Utilities (XLU) led declines, while healthcare (XLV) finished roughly flat.

Cross-Asset Snapshot

• Oil is testing the lower boundary of a local ascending channel near $60.
• US Treasury yields are pulling back after a sharp move higher, with the 10-year near 4.23%.
• VIX is stabilizing near the lower end of a local uptrend around 16.
• Gold has broken into a wider upward channel, setting a new all-time high above $4900.

Bulls remain in control, but PMI data will be critical in determining whether the rally can extend or whether markets enter a deeper consolidation phase.

Technical analysis by: Lucas Grant, Senior Technical Analyst at Finmire.