I pinpointed retail sales as the week’s biggest inflection point for Wall Street in Monday’s look ahead…
And we had lousy retail earnings that were slightly better than expected, which helped drive stocks higher. But earnings season is ending, so it’s important to look for new catalysts that could move the market.
An 0.1% month-over-month increase was expected in retail sales coming into the week, and we got 0.0%. But there’s a catch… the reason it was flat is due to the fact that energy prices came down in July.
So if you take out autos and gas, retail sales were actually quite a bit higher at 0.7%. If we look at what’s stressing the market right now, it’s the 10-year yield, which is up again Friday, and that’s going to be a negative stress on growth stocks like Cathie Wood’s ARK Innovation ETF, ARKK.
ARKK started the week around $52, we got stronger retail sales numbers excluding gas and autos, which means the Federal Reserve has more ramp to raise interest rates — and that’s not good for growth stocks.
So look what happened to ARKK, down to under $45 by Friday afternoon, a 14% haircut in just a few days…
This will keep moving the needle next week and something we have to pay attention to.
The stock market leads the real economy by about six months. And if you look at the past six months, we’ve done a complete 180 in the past month from super bearish to super bullish.
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