The market had a dramatic reversal on this first trading day of the new quarter. At its worst, all three major indices were lower by at least 1% and the S&P 500 was only inches away from its March lows. But a late day comeback triggered by better-than-expected sales results in GM made all three major indices end the session in green territory. The news on the economic front was actually quite positive. The ISM index increased to 50.2 in June from 49.6 while economists expected a drop to 48.6. Among its various components, the New Orders decreased slightly from 49.7 to 49.6 in June; Production increased to 51.5 from 51.2; Employment dropped to 43.7 from 45.5 and Prices increased to 91.5, the highest level since 1979 from 87.0 in the previous month. Clearly, the manufacturing side of the economy is still holding up relatively well despite headwinds from record crude price and declining home prices. In a separate report, construction spending in May fell 0.4% compared to a drop of 0.6% expected. It should be noted that private residential projects fell 1.6%, the 25th drop in the past 26 months.

Basic materials and transportations were among the biggest losers for the session. The former experienced some profit-taking last week and it looked like the pattern may continue for a while. On the winners’ list, we had names like healthcares and technologies. The CRB commodity index rose more than 1% and closed at a new high. Treasuries reversed from early gains and finished the session lower across the yield curve. The US dollar was mixed against most major currencies. The VIX index ended the session modestly lower after breaking 25 earlier. The new lows on NYSE and Nasdaq exceeded more than 1000 for the first time since mid-March.