Stocks closed sharply higher on Tuesday as activity in the U.S. service sector rose to its highest level in more than two years, signaling economic resilience as voters headed to the polls.
The Dow Jones Industrial Average of major U.S. companies rose more than 1% in Tuesday trading, closing at $42,221. The Nasdaq Composite Index, which has a large proportion of tech stocks, rose 1.43%, and the S&P 500 Index rose 1.23%.
The Institute for Supply Management (ISM) announced that the Purchasing Managers Index (PMI) for the services sector rose for the fourth consecutive month, reaching a level of 56.0, the highest level since August 2022.
S&P Global's October Services PMI was similarly strong, with the index level remaining in expansion territory at 55.0, down slightly from September's 55.2. The company said service activity on this measure has increased over the past 21 months.
The strong numbers follow an unexpected slowdown in the Labor Department's October employment report, with the economy growing by just 12,000 jobs last month and the unemployment rate holding steady at 4.1%. It was shown that
This number may have been lowered by the impact of hurricanes Helen and Milton and some high-profile labor movements.
Strong performance in the services sector bodes well for the economy's fourth quarter performance. According to a report from the Commerce Department, U.S. gross domestic product (GDP) grew by a healthy 3% in the third quarter.
Despite the strong data, analysts said concerns about political uncertainty amid a close presidential election were weighing on service industry professionals.
“Concerns about political uncertainty have once again become more prevalent than they were last month,” ISM Chairman Steve Miller said in a statement. “While the effects of hurricanes and longshore disruption were frequently mentioned, several panelists noted that the longshore workers' strike was short-lived and did not have as much of an impact as feared.”
One ISM survey respondent in the utilities sector said business was “booming.”
“Business is booming and there is nothing slowing down. Prices continue to rise slightly,” the official said.
A recent business sentiment survey conducted by accounting firm PwC found that 61% of business leaders expect an economic downturn within the next six months.
