Updated 1 month ago
The Stock Market Is Falling Because Bad News Is Bad Again
What if a September rate cut is too late? That’s the question spooking stock markets and boosting bonds after the ISM manufacturing index fell to its lowest level since November.
The Dow Jones Industrial Average was down about 500 points, or 1.2%. The S&P 500 was down 1.1%. The Nasdaq Composite was down 1.6%. The Russell 2000, which rallied in July on hopes of rate cuts paired with economic resilience, was down 2.8%.
Bond prices were rallying, meaning yields were falling. The yield on the 10-year Treasury note was down to 3.974%, falling below 4% for the first time since Feb. 2.
The ISM manufacturing index fell to a reading of 46.8 in July from 48.5 in June. The news followed an uptick in weekly jobless claims.
“Because the Fed failed to move yesterday, the ongoing deterioration in the economic data as evidenced by today’s rising initial jobless claims, Low unit labor costs, and abrupt slowing in global manufacturing activity suggest that we are getting to a point where bad economic news is bad for markets,” writes Neil Dutta, head of economic research at Renaissance Macro. “Until the Fed begins cutting, they are going to look behind the curve.”
Stocks were rallying earlier this week as traders bet that the Federal Reserve can start cutting interest rates in September without risking a recession. Reality may not be so rosy.
