Stocks fall. The S&P 500 Index broke out of its recent range, falling 0.8% on Tuesday amid negative trade headlines and news that an impeachment inquiry was being considered against President Donald Trump. Before yesterday’s decline, the S&P 500 had stalled at 3,000, closing within 1% of that level for 13 straight trading sessions. We don’t think impeachment inquiry will lead to significant weakness in equities, as we don’t expect any economic fallout. However, any political developments could add to already high uncertainty, which has rattled investors over the past year. Markets are little changed this morning, seemingly shrugging off the recent political drama.
Consumer confidence slides. Yesterday’s economic data weighed on investor sentiment as well. In September, the Conference Board’s Consumer Confidence Index fell 9.1 points to 125.1, its second biggest drop since 2011. Souring sentiment could hinder U.S. economic growth, which has been unusually dependent on consumer activity for growth recently as corporations put business spending on hold amid global uncertainty.
Economic data surprises. Even though yesterday’s consumer confidence report was discouraging, economic data has generally improved relative to expectations. The Citi U.S. Economic Surprise Index, a running average of economic data compared to economists’ forecasts, has recently reached levels not seen since April 2018. While the U.S. economy has slowed, it continues to show resilience in the face of softer global growth. Today on the LPL Research blog, we’ll highlight the areas of economic strength we’re seeing.
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