Stocks Tank, Lose Gains, Go Negative After Fed Stands Pat

The market was clearly disappointed that the Fed didn't announce something more aggressive.

Leading Economic Indicators Remain Weak

from Econompic blog:
While leading economic indicators expanded 0.3% during August, the expansion remains focused on areas controlled by monetary policy rather than the underlying economy. For the third month in a row (and four of the past five), indicators outside the Fed's control were negative.

Good News, Bad News Meltup

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.

Dallas Fed Survey Drops Far More Than Expected

... and of course, no reaction on Wall Street!

from Zero Hedge:

The collapse in the manufacturing base continues: the Dallas Fed general business activity index just printed at a whopping -17.5 on expectations of -3.2,  number that was supposed to be a gain from before, and yet another confirmation that Wall Steet is populated by a bunch of illiterate lemmings. From the report: "Perceptions of general business conditions were mixed in June. The general business activity index pushed further negative, falling from –7.4 to –17.5. Twenty-eight percent of respondents said activity weakened this month, the highest share in nine months. However, the company outlook index rose from 3.2 to 7.2, suggesting manufacturers were more optimistic about their firms’ prospects for the near future."