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Markets Modestly Lower Yesterday Amidst A Busy News Day
Disappointing start to the market yesterday with all of the major indexes finishing modestly lower.
Before the market opened, everyone was abuzz over Robert Mueller's indictments of Paul Manafort and Richard Gates. But as details of the indictments emerged, it became clear the charges were related to activities that preceded their association with the Trump campaign.
None of this looks good for Manafort, however. And if found guilty, he should indeed go to prison. But nobody was surprised it was Manafort who got indicted as it was widely expected for some time. And the market had a muted response (if any) to the news.
Of course, those who dislike Trump were joyous, while those who support him were ambivalent. If anything were to stick to the President, it would surely have an impact on the market. Nobody wants to see the country go thru something like that. But until then, the market has rightfully remained unshaken, as well it should.
In other news, traders will be waiting to see who President Trump picks for the Federal Reserve Chair. The announcement is expected on Thursday.
Personal Income and Outlays showed wages rose 0.4% on a m/m basis vs. last month's snapshot of 0.2%. Consumer spending rose 1.0%, easily beating last month's 0.1%. Core inflation increased just 0.1%, same as last month and in line with expectations. On a y/y basis the story was the same with a 1.3% reading, same as last month and in line with estimates.
While this shows inflation is still not a threat, in spite of the outsized 3% GDP we just got last week, it also continues to remain below the Fed's inflation target of 2%, which is considered healthy for the economy.
The best news of the day came from the Dallas Fed Manufacturing Survey. It soared from last month's 21.3 to 27.6, for a 29.5% increase. Analysts noted this was a 10-year high. Very bullish news.
If Monday's price action is any indication for the rest of the week, it might be a bit blasè for the next few days.
But don't expect that to last long as we'll get the always important Employment Situation Report on Friday. That has a long history of being a market mover. And there's no reason why Friday's report should be any different.
In the meantime, taking a short breather in the market is not unwelcome. And a pause that refreshes could make the next move that much stronger.
See you tomorrow,
Kevin Matras
Executive Vice President, Zacks Investment Research
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Disappointing start to the market yesterday with all of the major indexes finishing modestly lower. 
