Durable orders were down 7.3% versus expectations of a 5% decline. New orders for primary metals and machinery were both flat while orders for computers and electronic products declined 3.6%. Nondefense capital goods orders, excluding aircraft — a proxy for business investment — fell 3.3% after a 1.3% increase in June. Last week, new home sales data was less than expected.
Many economists view the biggest risk to the economy as premature end of easy monetary policy by the Fed. Forward guidance on tapering is having a significant impact on the markets.
This past weekend, the Fed concluded its conference in Jackson Hole. The general takeaway is the economy is not as strong as many had hoped and easy money policy is not going away in the near-term. The 10-year Treasury rate is down nearly 6% since its intraday high last Thursday. All of the major indexes are back above their 75-day moving averages with the exception of the Dow Jones Industrial Average which was hurt by disappointing results from Hewlett Packard (HPQ). The Delta Market Sentiment Indicator (MSI) is bullish at 54.3%. Investing when the indicator is near 50% provides new money with a tight stop-loss in the event the market turns negative.