Inflation data backs a soft landing, but it might not be enough to stop the market's swoon

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Inflation data backs a soft landing, but it might not be enough to stop the market's swoon. There’s an old saw on Wall Street: in corrections it takes a lot longer to lose the first 5% because people buy the dip. The second 5% comes a lot quicker. CNBC

The S & P 500 is now down six of the last seven trading sessions. Still, it's only 3% off its recent highs. Why does it feel worse? Maybe it's because everyone keeps trying to buy the dips, and it's not working. "Definitely no panic," Chris Murphy, co-head of derivative strategy at Susquehanna International Group told me. "If anything, feels like a lot of people want to buy a 5-10% dip. Every day this week, the S & P has rallied in the afternoon.

"AI euphoria is falling as very few companies are actually making any incremental revenue off it and market is now seeing that," he said. Tech weakness has been offset by strength in health care, energy and pharmaceuticals. The biggest risk seems to be rising yields. It's a two-edged sword: higher yields are a validation of the recovery, but it's tough on tech stocks. Cash on the sidelines A pullback in tech seems understandable given all the AI hype.

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