Stocks drop. Stocks are down this morning, paring gains after the S&P 500 Index climbed within 1% of a record-high close on October 15. Investors are stepping back amid weaker than expected economic data, increased tensions in the U.S.-China relationship, and pessimistic Brexit (or the United Kingdom leaving the European Union) headlines.
Retail sales decline. Consumer spending growth paused in September, a discouraging sign as the economic outlook becomes increasingly dependent on the U.S. consumer. Retail sales unexpectedly fell 0.3% in September, breaking a six-month streak of gains and undercutting signs of a strong U.S. consumer. On a positive note, August retail sales were revised solidly higher and control group sales, which we view as a cleaner measure of retail sales’ contribution to gross domestic product, were unchanged during the month.
IMF cuts global growth forecast. The International Monetary Fund (IMF) cut its global growth forecast to 3% for 2019, which would be the slowest pace of annual growth since 2008 and a significant drop from 3.6% growth in 2018. The IMF cited projected slowdowns in the U.S. and China as a primary reason for the reduction in growth forecasts, and added that policymakers should focus on alleviating trade tensions and promoting “multilateral cooperation” to buoy global economic prospects.
Calendar check-in. Even though stocks are down today, they’ve held up surprisingly well in October so far thanks to a potential thaw in the U.S.-China trade dispute. October has had a bad rap due to some spectacular crashes, but historical returns show the calendar could be about to turn into a bull’s best friend. On the LPL Research blog today, we’ll take a look at the S&P 500’s average path in the month of October, and highlight why we think there could be an upward bias in the market soon.
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