Stock Market Misread - Why Q2 GDP Actually Beat Forecasts

In its first reporting, second quarter GDP was reported up 2.3% this morning. Stock futures were edging lower into the release and stocks accelerated their pessimism after the news. Take heed though: While the data was lower than economists’ consensus expectations at surface inspection, there was a significant upward adjustment to the first quarter data that when taken into account would make this data more than acceptable. If stocks were to accurately reflect the message of this data, then they would be rising today. Thus, as the data is better understood, stocks should benefit, and I fully anticipate a market closing in the green today or recovering tomorrow. However, there is a caveat, which is that China economic growth deceleration (with a watchful eye on Europe as well) and energy sector troubles do not infect the U.S. economy significantly in the months ahead; and that the Fed will not err in its decision making. If you believe that is the case and you are a long-term investor willing to bear likely near-term volatility, then you own stocks but with powder dry on the side to invest on any significant decline between now and the end of the year (it is well overdue and will probably come). See the full stock market report here.

Sector Security	Midday	YTD	TTM
SPDR S&P 500 (NYSE: SPY)	-0.1%	+3.5%	+9.1%
SPDR Dow Jones (NYSE: DIA)	-0.1%	+0.8%	+7.3%
PowerShares QQQ (Nasdaq: QQQ)	+0.2%	+8.9%	+16.3%
iShares Russell 2000 (NYSE: IWM)	+0.3%	+3.3%	+8.6%
Energy Select Sector SPDR (NYSE: XLE)	-0.6%	-9.0%	-25.9%
Financial Select Sector SPDR (NYSE: XLF)	-0.0%	+3.1%	+12.5%
Technology Select Sector SPDR (NYSE: XLK)	-0.06%	+4.2%	+9.2%
Health Care Select Sector SPDR (NYSE: XLV)	-0.4%	+11.8%	+24.3%
Consumer Discretionary Select Sector SPDR (NYSE: XLY)	+0.1%	+12.0%	+20.4%
Consumer Staples Select Sector SPDR (NYSE: XLP)	-0.3%	+5.5%	+17.8%
Materials Select Sector SPDR (NYSE: XLB)	+0.4%	-5.0%	-5.8%
Utilities Select Sector SPDR (NYSE: XLU)	+0.9%	-7.3%	+6.8%

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