Monday data: Have Wall and Main Streets permanently diverged?
Main U.S. indexes red; Dow off most, down ~0.5%
Real estate leads S&P sector losers; Tech, Energy edge green
Euro STOXX 600 index down ~0.5%
Dollar, gold up; crude up >1%; bitcoin down >2%
U.S. 10-Year Treasury yield jumps to ~4.16%
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MONDAY DATA: HAVE WALL AND MAIN STREETS PERMANENTLY DIVERGED?
Investors started a new week on Monday with some fresh data showing the United States economy is softening a bit faster than analysts expected.
Still, the major indexes are still wafting along near all-time highs.
The Conference Board's (CB) Leading Economic index (LEI) USLEAD=ECI dipped by 0.5% last month, an acceleration from August's downwardly revised 0.3% decline.
The number was 20 basis points steeper than the Consensus estimate.
The LEI is an amalgamation of 10 forward-looking indicators, including initial jobless claims, U.S. Treasury yield spreads, ISM PMI new orders, building permits, S&P 500 price performance, and others.
And the last time it ticked higher was February 2022.
"Weakness in factory new orders continued to be a major drag on the US LEI in September as the global manufacturing slump persists," writes Justyna Zabinska-La Monica, CB's senior manager of Business Cycle Indicators. "Additionally, the yield curve remained inverted, building permits declined, and consumers' outlook for future business conditions was tepid."
CB's commentary goes on to say that the LEI is still signaling "uncertainty for economic activity ahead and is consistent with The Conference Board expectation for moderate growth at the close of 2024 and into early 2025."
For investors, it's always worth remembering that Main Street is not Wall Street, and the economy is not the stock market.
There are very few methods of illustrating this fact than overlaying the LEI against one of its constituents, the S&P 500.
While the two indexes historically tend to move in tandem, that relationship diverged around the time the bellwether SPX entered a bull market in October 2022.
Since then, the LEI has continued to drop to its current level, which is now a hair below the nadir of mandated shutdown shock of April 2020.
Over the same time period the SPX has soared, gaining around 64%:
(Stephen Culp)
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FOR MONDAY'S EARLIER LIVE MARKETS POSTS:
S&P 500, DOW DIP AHEAD OF BIG EARNINGS WEEK - CLICK HERE
BEWARE OF GOING ALL IN ON TRUMP BETS - CLICK HERE
GOLD: A BATTLE LINE IS DRAWN - CLICK HERE
ARE EARNINGS EXPECTATIONS LOW ENOUGH? - CLICK HERE
THE 'NO LANDING' SCENARIO THAT COULD SUPPORT U.S. EQUITIES - CLICK HERE
OIL BOUNCE LIFTS ENERGY, STOXX MUTED - CLICK HERE
EUROPEAN FUTURES EDGE LOWER - CLICK HERE
SAP SETS THE TONE - CLICK HERE
Leading economic index https://reut.rs/3NAbto6
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