This week we get served up the Big 3 economic reports to give us a wide ranging view on the health of the economy.
Typically, these are market moving events. However, with stocks on such a tremendous bull run, then the good news is likely priced in and the risk remains to the downside.
The first of those reports came in today, ISM Manufacturing. So let’s discuss the results along with a preview of the other 2 to shape our market outlook and trading plan.
The summarized version is that there is good reason to believe the Fed has made their last rate hike. Further, they have improved their future economic outlook to where they believe inflation can be tamed without creating a recession.
Investors already assumed that to be the case which was the catalyst behind the nearly non-stop rally we have enjoyed since mid March. That is when fears of the banking concerns started to go away allowing the S&P 500 (SPY – Get Rating) to bounce from 3,855 to the present level that is getting ever closer to the all time highs.
With the Fed announcement by the way side, plus Q2 earnings season in line with modest expectations, now attention turns to the Big 3 economic reports that kick off each new month.
ISM Manufacturing got things started on Tuesday morning. It is hard to say with a straight face that the 46.4 reading is good when everything below 50 is a sign of economic contraction. However, it is a step up from the even weaker 46.0 last month. More importantly, the New Orders component rose from recent weakness which generally means future readings will be higher as well.
