Friends
Wednesday – “the Fed has signaled that they will begin to lower interest rates in September- full speed ahead.”
Thursday – “oh my God the Fed should have cut rates yesterday; the economy is collapsing”
The truth probably lies somewhere in between the narratives mentioned above. We have been saying for a while that there has been plenty of economic data indicating that the economy is slowing down. Now slowing down from a 3% clip to a 2% for instance, wouldn’t be the end of the world. But the direction sure has been to the downside with regards to economic data in recent months. The Fed is trying to balance inflation and the labor market and thread the needle with monetary policy. The risks have risen on the employment side of the equation recently while inflation numbers have been better. So now the worry is that the Fed will be too late to lower rates and the labor market will deteriorate as the economy stumbles. We’ll get non-farm payroll and unemployment rate data tomorrow morning so stay tuned. In the meantime, the first day of August was not good for stocks.
By the close the Dow Jones Industrial Average was down 494 points to finish the day at 40,347. The S&P 500 was down 75 points to close at 5,446. The Nasdaq Composite Index was down 405 points to close at 17,194. Gold was up $14 to trade at $2,487 per ounce, while oil was down $.87 to trade at $77.04 per barrel WTI.
We thought this would be a wild week for stocks and we were right. We still have earnings releases from Apple and Amazon after the close today, and the aforementioned employment data tomorrow morning. This ride still isn’t over. Hold on tight.
Have a nice evening everyone.
