The U.S. manufacturing activity sentiment missed expectations in April.

After a brief uptick in March, activity retraced back into contraction, according to the Institute for Supply Management (ISM).

April ISM Manufacturing PMI Report: Key Highlights

• The ISM Manufacturing PMI declined from 50.3% to 49.2%, marking a decrease of 1.1 percentage points decline and missing expectations of 50%. Thus, April saw the manufacturing sector contract once again, following a single month of expansion, which had interrupted a streak of 16 consecutive months of contraction.
• The New Orders Index returned to contraction territory, registering 49.1 percent in April, Following one month of expansion. This figure represents a 2.3 percentage point decrease from the 51.4 percent recorded in March.
• The Prices Index climbed to 60.9%, marking a 5.1 percentage point increase compared to the reading of 55.8% in March. It marks a robust expansion territory, reflecting the ongoing escalation of commodity-driven costs. Meanwhile, imports maintained growth, albeit at a slower pace in April.
• "The U.S. manufacturing sector dropped back into contraction after growing in March, the first time since September 2022 that the sector reported expansion. Although demand improvement slowed, output remains positive and inputs stayed accommodative," said Timothy Fiore, chair of the Institute for Supply Management.
• "Demand remains at the early stages of recovery, with continuing signs of improving conditions. Production execution continued to expand in March, but at a slower rate of growth than in prior months. Suppliers continue to have capacity but work to improve lead times, due to their raw material supply chain disruptions," he added.
• The Employment Index registered at 48.6% in April, showing an increase of 1.2 percentage points from March's figure of 47.4%.

The Bureau of Labor Statistics reported Tuesday that overall U.S. job vacancies decreased from 8.81 million in February to 8.49 million in March, missing expectations of a shallower decline to 8.69 million.

Market Reactions: The U.S. dollar index (DXY), as tracked by the Invesco DB USD Index Bullish Fund ETF (NYSE:UUP), slightly weakened following Tuesday's data prints.

Stocks inched lower, extending Tuesday's declines. The S&P 500, as monitored through the SPDR S&P 500 ETF Trust (NYSE:SPY), fell 0.3%, while the tech-heavy Nasdaq 100 index underperformed, down 0.6%.

Traders are eagerly anticipating a pivotal Federal Reserve Open Market Committee meeting scheduled for 2:00 p.m. on Wednesday, followed by Fed Chair Jerome Powell's press conference at 2:30 p.m.

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