Stocks have broken out to a new rally, leaving behind the bad news of the past few weeks. This morning, consumer spending increased unexpectedly (but only due to back-to-school shopping -- what's so "unexpected" about that?), which has sent stocks rallying even beyond the overnight meltup. Now, however, more bad economic news has emerged. Pending home sales dropped 1.3% in July, and the Dallas Fed survey has showed continued contraction of economic activity. However, over the past few days, Wall St has once again begun ignoring the bad economic news, claiming that its all "priced in", and the economic contraction is being shrugged off once more. If the jobs report this Friday is a poor one, we will see another sharp correction in stocks. Let's hope its a good one, in which case we will see this rally fueled.
from Zero Hedge:
The second economic disappointment of the day comes from the Dallas Fed, which dropped from -2.0 to -11.4 on expectations of -9.0- this was the 4th consecutive negative print month. The report was, in a word, horrible, with just 2 of the 15 constituent indices posting an increase, and the bulk solidly in the red, led by Unfilled and New Orders which dropped 16.8 and 11.2, respectively: not good for economic growth. On the employment side there was nothing good either, with both employment and hours worked declining by -6.7 and -10.1, respectively.
