With second-quarter earnings season now largely behind the market, stock investors have been focusing on the latest economic data and for the most part been reacting positively to “bad economic news,” or any data that may point to an economic slowdown.
Read: The Fed’s monetary policy has lost some of its potency and interest rates may need to rise much higher as a result, economist says Meanwhile, “what we’re experiencing is a rolling recession,” said Jamie Cox, managing partner at Harris Financial Group. “Recession activity actually goes from sector to sector, but it doesn’t translate into this big broad-based decline.”
To break the cycle in which bad economic news is good news for stocks, economic data have to be much worse than now, indicating more damage from high interest rates, noted Flax. Data showed that the personal consumption expenditures price index rose a mild 0.2% in July, but the yearly inflation rate crept up to 3.3% from 3%, the government said last week.