Weak Economic News Continues

The United States service sector slowed to a new two-year low in January 2016 causing officials with the Federal Reserve to become worried. The Federal Reserve has been watching the market very closely since they raised interest rates for the first time in over a decade in December 2015.
The report and other recent economic news have caused the Federal Reserve to fear that the United States economy could weaken further. While the United States dollar is already strong, president of the Federal Reserve Bank of New York William C. Dudley says that United States economy could weaken further, but that most global markets will fare far worse.
The Institute for Supply Management’s(ISM) Nonmanufacturing Index fell another 2.3 points in January to reach the lowest level that it has been at since February 2014. The index is at 53.5 which is still above the neutral 50 level which would indicate that businesses are still manufacturing more than they did in recent years.
The ISM’s New Export Orders Index dropped to its lowest level since March 2009. Marc Sparks points out that import orders were also lower reaching levels not seen since July 2012. The only good news in the report is that United States companies continue to hire, although at a slower rate than anticipated.
Factors driving the market include the strong dollar, weakening in the global economy and the quick decline in profits in the United States energy sector.