There
was
a
perverse
view
this
year
that
bad
economic
news
was
actually
good
news
for
the
stock
market,
as
the
heat
coming
off
the
economy
would
give
the
Federal
Reserve
the
greenlight
to
cut
interest
rates.
This
made
some
sense
with
inflation
for
the
first
time
in
a
while
becoming
the
primary
market
bogeyman
over
a
slowing
economy.
But
now
investors
find
themselves
with
a
series
of
disappointing
economic
data
points
a
day
after
the
Fed
voted
to
keep
its
short-term
rate
at
the
highest
in
two
decades.
Yes,
Fed
Chair
Jerome
Powell
did
give
a
solid
hint
on
Wednesday
that
modest
quarter-point
rate
cut
was
coming
in
September,
but
the
market
is
waking
up
Thursday
to
the
fear
that
perhaps
that
will
be
too
little,
too
late.
The
weak
data
on
the
day:
July
manufacturing
activity
in
the
U.S.
fell
1.7
percentage
point
from
June
to
46.8%,
according
to
the
Institute
for
Supply
Management.
Any
number
below
50%
signals
a
contraction.
First-time
filings
for
unemployment
insurance
totaled
249,000
last
week,
an
increase
of
14,000
and
above
the
estimate.
It
was
the
highest
level
since
August
2023.
Announced
layoffs
last
month
were
the
highest
for
any
July
in
more
than
two
decades,
outplacement
firm
Challenger,
Gray
&
Christmas
reported.
Investors
got
what
they
thought
they
wanted,
with
the
10-year
Treasury
yield
breaking
below
4%
for
the
first
time
since
February.
But
instead
of
rallying,
the
Dow
Jones
Industrial
Average
is
diving
.
.DJI
1D
mountain
Dow,
1-day
Stocks
that
have
the
most
to
lose
in
a
recession
led
the
way,
with
JPMorgan
Chase
and
Caterpillar
down.
Even
tech
stocks
found
themselves
in
the
red
as
they
too,
may
be
hurt
more
by
a
slowing
economy,
than
their
valuations
are
boosted
by
lower
rates.
“The
economic
data
keep
rolling
on
in
the
direction
of
a
downturn,
if
not
recession,
this
morning,”
said
Chris
Rupkey,
FWDBONDS
chief
economist.
“The
stock
market
doesn’t
know
whether
to
laugh
or
cry
because
while
three
Fed
rate
cuts
may
be
coming
this
year
and
10-year
bond
yields
are
falling
below
4%,
the
winds
of
recession
are
coming
in
hard
according
to
purchasing
managers
at
manufacturing
firms.”
Adam
Crisafulli
of
Vital
Knowledge
agreed:
“The
ISM
shortfall
is
just
the
latest
sign
of
cooling
domestic
growth
conditions,
and
another
sign
that
the
Fed
should
have
commenced
its
easing
cycle
yesterday
instead
of
waiting
until
Sept.”
The
market
appears
to
be
returning
to
the
natural
order
of
things
where
investors
wished
for
a
strong
economy
that
lifts
earnings
first,
with
a
tailwind
of
lower
rates
that
boosts
valuations
as
a
far
second
hope.
Just
in
time
for
the
July
jobs
report
Friday,
which
is
expected
to
show
payroll
growth
slowed
to
185,000
from
206,000
payrolls
in
the
prior
month,
per
Dow
Jones
estimates.
—With
reporting
by
Yun
Li,
Jeff
Cox
