The market is still debating whether or not a slowing economy is a good thing for stocks. It appears that the sentiment for the time being is still in favor of a slowing economy (end of rate cycle) versus signs of growth (inflation). As soon as rate/inflation uncertainty is resolved then the market will digest what that means for stocks. Whether or not that is the best philosophy for the long-term is debatable, but at least for now that is how the market is reacting, and until proven otherwise we can assume it will continue.
That being said, the data lineup for next week includes the Fed meeting minutes and 2 qtr GDP during the first half of the week. The minutes really don't have any room to surprise on the upside as the no-more-rate-increase rally went off 2 weeks ago, and I anticipate a somewhat muted to negative response to the minutes. Same story for GDP, I don't see any plausible scenario for the market cheering the GDP number regardless of where it falls. Thursday has factory orders, personal income, & jobless claims - some back-and-forth potential, but nothing earth shattering. Perhaps the bulls will try to regain some lost ground on the back of the no news. On the plate for Friday: manufacturing and two housing-related numbers - construction spending and pending home sales. On the back of further housing sector weakness I think we could see an attempted rally Friday, but I don't see it pushing the dow back into positive territory for the week.
Of course oil prices remain ever-important, and have the potential to turn next week into a big red week, or some relief could push up a week of modest gains. We'll see, but I think negative sentiment continues to permeate the market and I don't see much rally-sparking potential.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment