There are worse things than today's durable goods report. A sharp stick in the eye. Giardia. The Tampa Bay bullpen.
That said, the data were pretty horrible, particularly for anyone hoping for signs of stability in the beleaguered tech sector. While overall orders fell by 2% in June, orders for tech goods slipped 3.2%. They are now 35% below where they were a year ago, back to 1997 levels.
That doesn't bode well for results in the third quarter, since presumably many of the orders made in June still haven't been sent out, and since companies don't book sales until they're shipped. As the current earnings (and lack thereof) season winds to a close, this is worth bearing in mind. Plenty of tech companies have again said that they don't have "visibility" into the future. But the orders data suggest that such visibility isn't really lacking. It's just that it's so gruesome that one can understand why plenty of CEOs in Silicon Valley want to shield their eyes.
CEO Carly Fiorina.
Tech Demand Tumbles
Source: Census Bureau
More of the Grinding
After yesterday's respite, stocks are grinding lower again. And again, volume is very low. On Wall Street, frustration is running deep -- not just because the market isn't making any headway, but because there isn't much new to say. The manufacturing economy remains in recession. The tech slump gets deeper. The consumer continues to hold up and housing remains robust, both helping to keep the overall economy above the flatline. These things were true last month, and they were true the month before. Nothing new under this sun.
"This is the kind of market that drives portfolio managers crazy," says
Salomon Smith Barney
equity strategist John Manley. "It's very hard to add value at this point."
That may begin to change. The race to see which will happen first, manufacturing improving or the consumer retrenching, should be resolved soon. The government has begun to mail out rebate checks, and the degree to which those refunds boost the economy should become apparent over the next several weeks. How well the Fed's interest rate cuts have worked should also be known shortly.
"I don't think you get any real visibility
there's that word again until September," says Manley. "But I think people start straining to see in August." Depending on how you look at it, that trade will be very high-risk or very high-reward. To bank on recovery and then find that the consumer has flinched could be disastrous. But if manufacturing begins to stabilize while the consumer is still wearing the yellow jersey, then stocks might be worth talking about again.