Stocks closed lower across the board with all of the major indexes down by -1% or more.

Interest rate concerns continue to weigh on stocks.

But so did yesterday's weaker than expected economic reports.

New Home Sales fell to 675,000 units (annualized) vs. last month's 739K and views for 699K.

And Consumer Confidence slipped to 103.0 vs. last month's 108.7 and the consensus for 105.8.

It wasn't all bad. The Richmond Fed Manufacturing Index improved to 5 vs. last month's -7. But it wasn't enough to offset the others. Nor was it enough to keep people from mentioning the 'r' word (recession) again.

Even though the Fed increased their full-year GDP estimate this year to 2.1% from their previous 1.0%, the higher interest rates and weakening economic numbers are causing some to rethink their forecast not only for this year but also for next.

Jamie Dimon didn't help matters when he mentioned the prospect of 7% interest rates while talking at the JPMorgan investor summit in Mumbai, India yesterday. Granted, he characterized it as a worst case scenario if inflation keeps going up. And he threw out the word stagflation. Nonetheless, given the backdrop of soaring treasury yields, his 7% comment spooked plenty of investors.

We'll get another look at inflation on Friday when the Personal Consumption Expenditures (PCE) index comes out.

In the meantime, it would be good to remember that the Fed is only talking about one more rate hike this year which would put the Fed Funds rate at 5.6%, not 7%.

Moreover, the Federal Reserve Bank of Atlanta's GDP Now forecast sees Q3 GDP at 4.9%. That is not indicative of a recession or stagflation.

On today's economic report docket we'll get MBA Mortgage Applications, Durable Goods Orders, the Survey of Business Uncertainty, and the State Street Investor Confidence Index.

Additionally, we're now in day 13 of the autoworkers strike.

And we have just 4 more days for Congress to get a budget deal done by the end of the month to avoid a government shutdown.

Gladly, there's even fewer days left before the trading month ends. And it can't come soon enough.

But the statistical odds of a rally in Q4 are pretty compelling. History shows if the market is up more than 10% thru July, and August is down, the remainder of the year is up 100% of the time with an average gain of 9.9% (median of 8.7%).

The sooner we can close the book on September, the better.

See you tomorrow,