Stock Market Action Is Slowing as Focus Shifts to Weakening Economic Data

The major market indexes are trading close to unchanged on Thursday morning. The action has battled to a standstill as the bulls focus on positive technical conditions and price action while the bears focus on the potential for weaker economic data and more trade and tariff turmoil.

The bulls have been winning the battle recently, but the bears have remained confident that weaker economic growth and sticky inflation will eventually become clear and put an end to the uptrend that has been in place since April 9.

The most notable aspect of the recent action has been how the market has continued to trend higher while there has been an unusually high level of skepticism. Many pundits and economists are convinced that negative fallout from tariffs is inevitable, but there have been very few signs of it.

On Wednesday, a weak ADP payroll report caused a little concern but was quickly brushed off. On Friday, there will be much more important payroll data in the form of the May jobs report, which will capture some of the time period when tariffs started to be implemented.

One development that is helping to prevent a selloff is that the Fed is in a position to cut interest rates very quickly should there be clear economic slowing. President Trump is frustrated with the Fed’s lack of urgency, but some of the recent economic news has caused an uptick in the likelihood of Fed rate cuts.

We have weekly unemployment claims on Thursday morning that may see a small reaction, but it’s the jobs news on Friday that is the next big event. A strong report will stave off worries about economic growth, but it may boost concerns about inflationary pressures.

We are in wait-and-see mode, and I’ll be focused primarily on managing positions and trying to avoid any significant drawdowns.

At the time of publication, Rev Shark had no positions in any securities mentioned.