The S&P 500 (SPX) is trading lower on Wednesday, although the index climbed from its intraday low following an encouraging update from the Institute for Supply Management (ISM).
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In January, the ISM Services Purchasing Managers’ Index (PMI) registered a reading of 53.8, unchanged from December and topping the consensus estimate of 53.5. The Services PMI has now remained in expansion territory for 19 consecutive months and is at its highest level since October 2024. A reading above 50 signals expansion, while a reading below 50 points to contraction.
Services Continue to Expand with Heavy Data Center Demand
The index tracks business activity in the services sector, accounting for factors like employment, new orders, and pricing trends. The health of the sector is viewed as a key indicator of economic health, as services account for nearly 80% of gross domestic product (GDP).
Respondents to the ISM survey noted that business activity is off to a slow start in 2026, which is typical for this time of the year. Some pointed out that data center demand has remained elevated and outpaced supply, leading to an “exciting and challenging time in the industry.”