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Stocks closed mixed yesterday with only the Dow finishing in the green. All of the indexes were higher in the morning, but by early afternoon, all were in the red, expect for the Dow.
Kevin Matras   
Profit from the Pros
By Kevin Matras
Executive Vice President
Zacks Investment Research

Stocks End Mixed Yesterday, But Poised For Another Up Week

Stocks closed mixed yesterday with only the Dow finishing in the green.

All of the indexes were higher in the morning, but by early afternoon, all were in the red, expect for the Dow.

Yesterday's Weekly Jobless Claims fell -5,000 to 238K, just above expectations for 235K. The 4-week moving average came in at 232.75K vs. last month's 227.25K.

The Housing Starts and Permits report showed Starts at 1.277 million units (annualized) vs. last month's 1.352M and views for 1.373M. Permits came in at 1.386M vs. last month's 1.440M and estimates for 1.450M.

The Philadelphia Fed Manufacturing Index slipped to 1.3 vs. last month's 4.5 and expectations for 5.2.

And the Atlanta Fed Business Inflation Expectations was steady at 2.3% y/y vs. last month's 2.3% pace.

Yesterday, Minneapolis Federal Reserve Bank President Neel Kashkari said "there is some evidence of some softening around the margins" of the economy. But said the "U.S. economy has proven to be remarkably resilient." And that "we are getting disinflation despite remarkable economic growth." But he acknowledged that it might take a "year or two" for inflation to get to 2%.

Although, last Sunday, he said it was a "reasonable prediction" to expect the Fed to cut rates in December. (This comports with what the Fed suggested last week of one rate cut by year's end.)

The economy and the market has been doing just fine without rate cuts. And while neither need cuts right now, nobody wants to see the Fed get behind the curve. But if rate cuts are set to begin by the end of the year (November or December), we should be in fine shape.

While the Fed waits for greater confidence for U.S. inflation to be on a path toward 2%, the Bank of England (BOE) saw their 2% target realized in their latest report. Although, the BOE decided to keep interest rates as is at 5.25%. Nonetheless, the deputy chief U.K. economist at Capital Economics said "several developments implied a rate cut is getting closer."

In fact, many are now speculating that they could see their first rate cut in August.

Other central banks in Europe have already begun cutting rates. So the BOE won't be the first. But their getting closer suggests we are too, given their inflation rate and ours have been tracking very closely (even though our progress stalled over the last few months while theirs continued to fall).

Today we'll get the PMI Composite report, Existing Home Sales, and the Leading Indicators report.

It's also Quadruple Witching, which means index futures, stock futures, index options, and stock options all expire. So there could be some extra volatility today.

With one more day to go, stocks are poised to put in another up week. If so, that will make it 3 up weeks in a row for the S&P and Nasdaq.


Kevin Matras

Executive Vice President, Zacks Investment Research


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