1. Moving the markets

Despite an early pop in the major indexes, the struggle of finding a bottom, off which to launch a bullish rebound from, eluded traders and algos alike. Absent of a major Ramp-A-Thon tomorrow, the last day of the quarter, Wall Street will be left swallowing the bitter pill that the worst half of a year since 1970 has become reality.

Yesterday’s weak consumer sentiment drove another nail in the coffin of bullish hope, as a slowing economy and aggressive Fed rate hikes had occupied traders. Even the occasional “face-ripping” short-squeezes could not deny the fact that we are stuck in bear market territory, and that the fine art of catching a falling knife, AKA bottom fishing, may not be the wisest path of dealing with the current market environment.

The end-result is, as ZeroHedge called it, that rate-hike expectations have stalled (i.e. the market no longer believes the Fed will be hiking as aggressively as it did) as recession fears are brought forward, and more notably subsequent rate-cut expectations have surged (now pricing in more than 3 rate-cuts).

Bond prices rallied, as yields dropped with the 10-year sliding almost 8 bps to close at 3.10%, a substantial decline from yesterday’s high of 3.25%. The major indexes ended up hugging their unchanged lines, but SmallCaps were clobbered and lost around 1%.

The US Dollar continued its bullish rampage, Crude Oil tanked on the day, as did Natural Gas, while Gold pumped and dumped and closed unchanged.  

Treading water and going nowhere best describes this session driven by nothing but uncertainty.

1. Moving the markets

Despite an early bounce, the major indexes hit the skids due to disappointing economic data. The reversal started with the release of the Consumer Confidence Index, which crashed to a reading of 98.7 in June from a prior 103.2 vs. an expected 100.0.

Additionally, as ZeroHedge reported, the actions of Americans, dumping their savings to afford the cost of living, suggests that Conference Board Expectations have further to fall. Finally, for the first time since 2019, “soft” survey data has dropped below “hard” real economic data, while “Hope” is getting hammered.

Ouch! None of this bodes well for our economic future, and especially for the prospect of increased earnings, and therefore stock prices, in an environment where 67% of economic growth is generated by consumers, which appear to be tapped out.

As a result, the major indexes got spanked with the S&P 500 dropping back into bear market territory, after just having climbed out of it last Friday. Hawkishness dominated the tone of the market, as rate hike expectations climbed again.

Bond yields ripped and dipped and ended the session just about unchanged, but the US Dollar recovered from its recent weakness and rallied. Gold had a great overnight session but was sold later with the precious metal dipping slightly into the red.  

With two more trading days till the end of this horrific quarter, will the bulls be able to recoup some of their losses?

1. Moving the markets

Traders continued their struggle of determining whether Friday’s comeback rally was truly indicative of stocks having found a bottom or just experienced another dead-cat-bounce. While I believe the latter is the case, we could see more upward momentum through the end of this quarter.

Today, markets were just aimlessly chopping around and digesting the various news items that simply added to intra-day volatility, of which we might see more during this week. Not helping matters was the plunge in the Dallas Fed index, which measures the Manufacturing business activity and the corresponding forecast, neither of which showed optimistic numbers.

On the other hand, as ZeroHedge reported, the Economic Surprise Index showed some good news in that it ticked up slightly. That tiny little improvement was enough to send Rate Hike Expectations higher, as hawkish views were suddenly dominant again.   

In the end, the major indexes lost some of Friday’s mojo and closed lower, while last week’s short squeeze ran out of ammo. Bond yields reversed as well and headed higher with the 10-year adding 7.6 bps to close at 3.21%.

The US Dollar ended the session unchanged, while Gold popped and dropped and closed a tad lower.

Nothing was gained and not much was lost during these few hours of meaningless meandering.