NOBODY’S LAUGHING… Funny week on Wall Street. Funny strange, not funny ha-ha. The Dow suffered its biggest weekly loss since January and the S&P 500 registered its worst weekly drop in over two years, while the Nasdaq dipped more than 2%. The strange part was that all this selling happened amidst a flurry of decent economic data. The Q2 GDP–Advanced reading had the economy growing at a 4% annual clip, after its Q1 –2.1% decline. Plus, Consumer Confidence hit its highest level since October 2007 and ISM Manufacturing solidly beat estimates. But the economic good news was bad news for investors who fear it may cause the Fed to raise rates sooner.
That too was a strange reaction, given the Fed’s statement Wednesday that they expect to keep rates low a good while longer. But there were disappointments. Pending Home Sales, the Chicago PMI manufacturing read, and Michigan Consumer Sentiment all fell short of expectations. The July Employment Report also missed, with 209,000 new nonfarm payrolls, although this was the sixth month in a row the number was above 200,000, describing a sustained if not especially strong recovery. The Unemployment Rate ticked up to 6.2%, yet that happened because the labor force grew, a good thing, showing more people are now hopeful they’ll find a job.
The week ended with the Dow down 2.8%, to 16493; the S&P 500 down 2.7%, at 1925; and the Nasdaq down 2.2%, to 4353.