1:45 PM PT: Stocks Sink Further.
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The Shanghai Composite initially traded higher after July manufacturing activity expanded at the fastest pace in 2 ½ years, but fell back with the rest of Asia. With growing concerns that sanctions on Russia will be felt most by the German economy, that market fell through its 200-day moving average. Concerns over bond holdings fueled by the technical default of Argentina and the potential that a Portuguese bank might need a bailout added to Europe’s woes.
Heading into the US open, markets were under pressure in a continuation of yesterday’s rout. Then, initially, the flood of data out this morning was interpreted as being just about perfect. Employment rose, but not too fast, hourly earnings were subdued, PCE prices came in lower than expected, and the unemployment rate actually rose as participation increased. After erasing losses and moving well into the black, markets again turned around and headed back to the lows. Michigan Sentiment was in line with expectations, while the ISM Index was better and Construction Spending missed. As stocks fell, yields on the 10-Year, which were cited as part of the cause for yesterday‘s selloff, fell back below 2.5%.
As the day wore on, some of the intense selling pressure abated and markets rose back to the flat line and yields slipped back above 2.5%. Heading into the close, bears took over once again and markets closed with modest losses