Market Reacts To Domestic Squabble
Traders initially breathed a sign of relief that the
Q2 gross domestic product (GDP) figures came in slightly
better-than-expected, but they soon reckoned it would be safer to not
squabble over tenths of percentages when dealing with a government statistic
that is notoriously inaccurate and still leaves the economy just a small
fraction away from recession.
The Commerce Department revised the broadest figures
of economic activity down to .2% from .7%, the lowest pace of growth eight
years. The barely above consensus view figures spurred a head-fake higher in
stock indexes this morning, and a retest to form an intraday double top,
providing an opportunity to get short at the morning high.
Stocks cascaded, repeating the last week’s pattern of
buyers staying out of the way of a southbound freight train. Both the Dow
and S&P 500 made a whistle stop at new multi-month lows.
The Dow initially skidded triple digits and is down
97 at 10,122. The S&P 500 is down 7.66 at 1153.85 and the Nasdaq
Composite is off 17.21 at 1847.77.
Inside the GDP numbers, one of the factors giving the
economy unexpected strength was robust consumer spending. But just one day
after the Conference Board’s consumer confidence index took an unexpected
drop, traders implied that the recessionary writing may be on the wall as
economically uncertain (unconfident) consumers appear poised to hold off on
making new purchases.
Unemployment is a force making consumers less certain
about their economic futures. Sizeable layoffs from major corporations have
been announced almost daily throughout 2001.
And layoffs have not been confined to the US, a
factor which speaks to the global reach of the economic turndown.
Punctuating the layoff trend, Gateway said it will lay off 25% of its global
work force, about 5,000 jobs, and close operations in Europe, Asia, and
Australia.
Forest and paper products
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PowerRating) are the only
major sector up more than 1%. Semiconductors
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and banks
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PowerRating) are leading to the downside with losses ranging from
1.78% to 3.10%.