The bulls managed to get a nice reversal rally going on Tuesday of last week. But, when push came to shove on Friday, the bulls couldn't follow-through and carry the market meaningfully higher. Though the market finished the week above its key short-term moving averages, it also finished the week pointing in a bearish direction.
Maybe it was just a bad day. Maybe the market will rekindle last week's jump-started rally early on this week and make a run for new highs. (There's certainly room and some reason for it do so.) But, as has been the case all year long, there are a lot of maybes, ifs, and buts keeping the market stuck in the mud, creating a very choppy and only partially-predictable environment.
We'll explore the situation below, after a run-down of last week's and this week's economic numbers.
Economic Data
Last week was relatively busy on the economic data front, but none of it was as much-anticipated as Wednesday's decision from the FOMC regarding interest rates. There was no change – the Fed Funds Rate remains at 0.25%. Moreover, though there was plenty of rhetorical, the language in the Fed's said little more than the FOMC was likely to effect the first rate hike in years “soon”, as in (most likely) sometime before the end of the year. The bond market, slightly surprised at the lack of conviction, sent yields down slightly the rest of the week once they had time to digest the news.
Consumer confidence took a hit in July, according to not one but two different measures of sentiment. The Conference Board's consumer confidence score fell from 99.8 to 90.9, while the Michigan Sentiment Index fell from 96.1 to 93.1. Both are a step in the wrong direction, but neither was a trend-breaker.
Consumer Sentiment Trend Charts
Source: Thomas Reuters
We also heard the first estimate of Q2's GDP growth rate last week. Economists think the economy grew 2.3% last quarter. Though the figure might be changed slightly with future revisions, any conceivable number for the second quarter is better than the first quarter's 0.6% growth.
