Why Did Stocks Drop Yesterday?
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What’s in Today’s Report:
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- Bottom Line – Why Did Stocks Drop Yesterday?
- Chart: S&P 500 Tests Key Support
- Economic Takeaways: Case-Shiller Home Price Index & Consumer Confidence
- Philadelphia Fed Service PMI Turns Negative, Price Readings Elevated (Stagflation)
Stock futures are bouncing back modestly and bonds are stable this morning. This is amid improvement in Chinese economic data while data in Europe was less encouraging.
Economically, Chinese Industrial Profits were down -11.7% y/y in August. But that was up from -15.5% y/y in July suggesting government stimulus efforts may be stabilizing the economy. The property development sector remains a major source of uncertainty.
Meanwhile, in Europe, Eurozone M3 Money Supply declined more than expected, down -1.3% vs. (E) -1.0%. Which underscores tightening financial conditions in the EU amid aggressive policy measures by the ECB.
Today, the calendar is fairly light as there is just one economic report to watch this morning: Durable Goods Orders (E: -0.3%) and no Fed officials are scheduled to speak.
In the afternoon there is a 5-Yr Treasury Note auction at 1:00 p.m.. ET, and as usual, if there is any meaningful move in yields, it could impact equity markets (stable or easing yields would be welcomed by equity bulls, new highs would pressure stocks and other risk assets).
Sevens Report Q3 ’23 Quarterly Letter Coming October 2nd.
The Q3 2023 Quarterly Letter will be delivered to advisor subscribers on Monday, October 2nd.
The S&P 500 just hit the lowest level since March amid concerns about Fed rate hikes, a rebound in inflation and a possible recession.
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You can view our Q2 ’23 Quarterly Letter here.
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