Despite worse than expected new-home sales and industrial production numbers, the markets managed a rebound yesterday by reversing an early 100 point drop of the Dow. The gains were modest, but at least it was an up day.
Today could prove to be another difficult one as the weekly report on jobless claims is on the agenda. Any more signs of a deteriorating job market could send the major indexes lower.
As I posted yesterday, the early selling ran into some support at the S&P; 500 1,040 level, which turned out to be the low of the day. A close below would be another sign of bearishness and would bring 1,000 level into play.
If the markets make it through today’s jobless claims numbers without too much damage, we may still face a severe headwind on Friday when the GDP second quarter estimates are released. If more evidence of a slowing economy surfaces, this market has no other way to go but down, which will bode well for all bond holdings.
Positive numbers are definitely needed to put a floor under this month’s sell off, which has the S&P; 500 down by -4.3% so far.