When the stock market turns like it has, every sliver of economic data holds hope of halting the slide and providing some stability. Even relatively minor economic statistics can take on added meaning in a market on edge.
There is no shortage of reports due in the week ahead. Economic activity from regional Federal Reserve banks in Dallas, Richmond, and Chicago will be released throughout the week. A private gauge of major metropolitan home prices comes out on Tuesday. Home sales, inflation and consumer confidence figures also are on the calendar.
Long-term investors know not to look for stock market signals by looking at the economy through a peephole.
Of course, the worry is that stocks are signaling future troubles in the economy. Almost all the major stock sectors have fallen over the past three months. And those sectors tied closest to the economy — financials, energy, industrial and materials — are the worst performing S&P 500 sectors year to date.
The economy may be slowing. After digesting the sugar high of corporate tax cuts, and disregarding a Federal Reserve committed to raising interest rates, the stock market’s biggest indices have erased their gains for the year. A slowdown doesn’t necessarily mean recession, but it doesn’t feel good for investors.
Economic data and stock market prices are inherently in conflict. Stock investors buy or sell in anticipation of future business. Economic reports tell us what has happened in the past. Investors have to find balance in the present.
Tom Hudson hosts “The Sunshine Economy” on WLRN-FM; @HudsonsView.