On July 3rd, the Institute for Supply Management (ISM) released its June PMI report for the service industry. The report shows that the ISM Services PMI index decreased from 53.8 in May to 48.8 in June, lower than analysts' expectations of 52.5. The index below 50 indicates that the service industry is in a state of contraction.

The new order index decreased from 54.1 in May to 47.3 in June, and the employment index decreased from 47.1 to 46.1.

The ISM commented, "The decline in the composite index in June was mainly due to a significant decrease in commercial activity, the second contraction in new orders since May 2020, and a sustained contraction in employment."

On the same day, traders also paid attention to the final reading of S&P's global services PMI report. The report shows that the S&P Global Services PMI rose from 54.8 in May to 55.3 in June, slightly higher than analysts' expectations of 55.1.

Factory orders in May decreased by 0.5% month on month, while analysts had originally expected a growth of 0.2%.

Due to the weaker than expected release of the ISM Services PMI report, the US dollar index fell to 105.00 levels. The unexpected weakness in the service industry may provide the Federal Reserve with an opportunity to start cutting interest rates earlier than expected.

The gold price broke through 2,350 US dollars and is now trying to stabilize above 2,365 US dollars. Traders are concerned about the US dollar pullback and the decline of treasury bond bond yield.

The S&P 500 index briefly approached its intraday high of 5,530 points after the report was released. Despite the weak report, stock market traders remained optimistic because they were more concerned about the decline in treasury bond yields and hoped that the Federal Reserve would start the interest rate cutting cycle.