Citi's latest analysis of the S&P 500 highlights a mixed economic landscape, with contrasting performances across sectors. The Manufacturing PMI has dropped to 48.3, signaling ongoing contraction, while the Services PMI has surged to 58.5, its highest level since 2021. This divergence underscores a manufacturing sector under pressure, contrasted by robust growth in services. Despite the strong services activity, employment indices show only modest expansion, raising concerns about the sustainability of this growth. Citi analysts remain cautious, pointing to potential labor market weakening and structural factors like modest rent inflation and slowing wage growth. Disinflationary trends, with falling input and output prices in services, suggest that inflation may ease further, adding another layer of complexity to the economic outlook.
The SPDR Portfolio S&P 500 Growth ETF (SPYG) has responded to these developments, rising 0.75% to $91.08 as of 12:00 PM on Monday, December 16.