The stock market couldn’t quite get any more upside follow-through from the rally that began late last week. Instead, an early morning advance was reversed…and the major averages closed in negative territory. That said, it was not a horrible day by any means. The decline came on lower volume…and breadth that was basically flat. Therefore, although it was disappointing that the stock market didn’t get some more upside follow-through, it was not the kind of day that told us that this most recent bounce is going to roll back over in a significant way immediately. In other words, the jury is still out.
Both the bulls and the bears had something they could feel good about from Chairman Powell’s testimony yesterday.. His comments that the Fed would stay nimble gave the bulls the feeling that the Fed could pivot earlier than most people are expecting right now. On the flip side, the fact that Mr. Powell said that it would be “very challenging” to achieve a soft landing gave fodder to the bears as well…….The second day of his testimony is today, but the second day of his semi-annual (two-day) testimony is rarely something that produces any market-moving news. This doesn’t mean we won’t get anything to chew on from Mr. Powell today, but it looks like the bigger news out of DC today will likely come from the Supreme Court. (However, those rulings will have a bigger impact on political issues than financial ones.)
It is becoming clearer by the day that the consumer is not going to stay as strong in the second half of the year as they were in the first half. The pent-up demand that had developed once again over the winter (with its semi-lockdowns) has faded. Searches on travel websites are starting to fall…and ...