Daily Data Flow: Japanese Decline Brings Stocks Down; Dollar Rallies Ahead of Fed Outlook; Weak Retail Sales Coming

Stocks Fall After Weekly Decline in Japanese GDP (Bloomberg)

U.S. stocks fell today, sending the S&P 500 to its fifth drop in six sessions. This was due in part to data which indicated a slowdown in Japan’s economic growth, as well investors who await tomorrow’s report on American retail sales. “We have growth frustratingly low offset by discount rates that are unnaturally low,” Joe Costigan, director of equity research at Bryn Mawr Trust Co. in Bryn Mawr, Pennsylvania, said. “As long as that’s the case, the market will stay locked at least into September and you’ll see days like this with low volume and really not a lot of conviction.”

Dollar Rallies Ahead of Fed Outlook (Reuters)

The debate on when the Federal Reserve plans to scale back its stimulus hasn’t deterred the dollar from rallying today, with strong U.S. data prompting the Fed to begin tapering sooner rather than later. Market players have said that the near-term outlook for the dollar hinges on U.S. data from this week. “Trading could continue at its soporific pace until tomorrow’s U.S. retail sales report which offer traders a better look at consumer spending at the start of Q3,” said Boris Schlossberg, managing director of foreign exchange at BK Asset Management in New York. “If the data shows further weakening, the greenback could quickly give up today’s gains as markets begin to doubt the September taper by the Fed.”

Expect Weak Retail Earnings, Says Fund Manager (CNBC)

Hedge fund manager David Berman of Durban Capital is warning investors that they may underestimate how “horrible” the results of the retail sector’s earnings season could be. “The consumer, as I see it, is actually not weak. I think the retailer is weak,” Berman said. “In a few weeks, we’re going to have a lot of retailers reporting. We actually think it’s going to be a lot worse than people think,” he continued. “We thought things would bounce back, but they don’t seem to have.” Berman added that the health of the consumer is doing fine, because they are spending on items like cars, travel and technology.