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Courtesy of David Brown, Chief Market Strategist, Sabrient
Despite spending much of the day below the 200-day moving average, the S&P 500 closed at 2986.94, just barely above the 200-day MA, thus, avoiding a marker that hasn’t occurred since last September. Clearly, the market is going to track the outcome of the amateur theatrics that we’ve seen in Congress over the past several weeks. The market will stabilize and rise when the Senate passes the debt ceiling bill, which passed the House this afternoon — or the market may freefall if the bill fails to pass. How far and how fast the market rises or falls depends on the actual measures contained in the bill and, more importantly, the ramifications of those measures.
There’s no doubt that Congress’s amateur performance over the past ten days has inflicted significant damage to the market, the economy, our global respect, and the confidence and morale of the public. Last week’s report on second quarter GDP revealed an economy growing more slowly than expected — +1.3% versus the expected +1.9%. But the real shocker was the revision of the first quarter GDP number. Instead of growing 1.7% as reported last month, the revised number showed a scant 0.4% growth.
Last week’s durable goods report revealed a huge drop from May’s +1.9% to June’s -2.1%, which was considerably lower than the expected +0.5%. Today’s ISM Manufacturing Index reading put a big fat exclamation point behind the slow-growth indicators, coming in barely expansive, at 50.9. Anything less than 50 means the economy is contracting.
The bottom line is we have a barely growing economy, with very high unemployment. And the clowns in Congress want to reduce government spending?
I know of no economist who thinks that any good result can come from that. As David Frum, a CNN contributor and avowed Republican, summed up in his column today: “Wake up GOP: Smashing system doesn’t fix it.”
But hey, the show must go on.
Market stats. Our market stats accurately reflect the mood of the market, with the most negative weekly numbers this year. The best performing award goes to Large-cap Growth, which lost nearly -4.0% for the week, while Small-cap Growth captured the loser’s trophy with a -5.8% loss.
No sector even came close to positive. Public…
