Don’t celebrate just yet.

Investors were all set to bid up equities following a “Goldilocks” US jobs report when a key gauge of services sector activity virtually screamed “Stagflation!” in a crowded theater.

Just 48 hours after a contraction-territory ISM manufacturing headline conspired with a hot read on an underlying measure of factory prices to send a dire warning about the macro conjuncture, ISM services did the same.

The services headline missed estimates badly, but more important than the miss was the level: 49.4 counted as the first contraction-territory reading since December of 2022. April was thus the first month in 16 during which both ISM headlines were below the 50 demarcation line.

“The decline in the composite index is a result of lower business activity, slower new orders growth, faster supplier deliveries and the continued contraction in employment,” ISM’s Anthony Nieves said Friday, adding that panelists “indicated that overall business is generally slowing.”

The final read on S&P Global’s services gauge for the US economy for April was a little better at 51.3 (up from the flash print), but nevertheless marked a third straight monthly decline on the headline.

“Service sector growth slowed in April point[ing] to a sluggish start to the second quarter for the US economy,” Chris Williamson, S&P Global’s chief business economist, remarked, adding that “demand has weakened… reflect[ing] both businesses and households adjusting to higher costs and the prospect of higher-for-longer interest rates.”

Worryingly, the ISM services price measure rose nearly half a dozen points from March, to 59.2.

Again, that comes just two days after the factory-side measure jumped to the highest since summer of 2022.

If you care about nuance (and I realize no one does), you’ll be interested to know that a lackluster read on the ISM services employment gauge (45.9) was “primarily due to difficulties in back-filling positions and/or controlling labor expenses.” That may be inflationary, but it’s perhaps not the growth canary that the abysmal print suggests.

Williamson said that on S&P Global’s survey, “prices charged for services rose at a much reduced rate, registering one of the smallest increases seen over the past four years as greater competition and lower wage growth were reported to have taken some of the heat out of price setting.” (Emphasis mine.)

So, maybe these releases weren’t the stagflation warning they appeared to be at first glance. But the subtleties won’t so much matter for markets. And the S&P Global surveys for the US only count for traders when the “flash” readings are released, which is to say they count until the ISM surveys come out two weeks later.

What mattered on Friday were these three Bloomberg red heads:

• US APRIL ISM SERVICES PMI AT 49.4, LOWEST SINCE 2022; EST. 52
• APRIL ISM SERVICES PRICES PAID AT 3-MO HIGH OF 59.2 AFTER 53.4
• US APRIL ISM SERVICES EMPLOYMENT AT 45.9 VS 48.5

That’s what the algos saw at 10:00 on the dot. And this is how they traded it by 10:01:

• S&P 500, NASDAQ 100 PARE GAINES AFTER ISM SERVICES DATA

They’re not much for nuance, those machines.