Stocks Pull Back, Remain Near All-Time Highs  Image: Bigstock Stocks closed lower yesterday. They bounced nicely off of their worst levels of the day. But still finished lower nonetheless. Although, for context, stocks have been on a tear. Even though the month is not over, the S&P has been up, going on its seventh month in a row. So a little bit of profit taking is not out of the question. A larger than expected decline in Retail Sales didn't help matters. Month over month, retail sales were down -1.1% vs. views for -0.2%. Ex-Vehicles, it was only down -0.4% vs. 0.2%. And Ex-Vehicles & Gas, it was down -0.7% vs. -0.3%. Either way, it was a bit of a surprise. But probably not entirely, as we have already seen some economic reports show a bit of a slowdown. Things are still looking strong. But supply disruptions, and worker shortages, have had an effect. As we've been mentioning, those things are transitory. And when the enhanced unemployment benefits come to an end in September, we should begin to see an easing of these supply challenges and worker shortages. And that will lead to more economic activity. The Housing Market Index also came in a bit under expectations at 75 vs. views for 80. That's still a strong reading. But under the consensus. Industrial Production, however, surpassed expectations with a 0.9% m/m gain vs. last month's 0.2% and views for 0.4%. The report also showed Manufacturing Output up 1.4% vs. last month's -0.3% and the consensus for 0.5%. And the Capacity Utilization Rate rose to 76.1% vs. last month's 75.4% and views for 75.7%. We'll get another look at the economy today with MBA Mortgage Applications, and the Housing Starts and Permits report. We'll also get the FOMC Minutes later in the afternoon. Everybody will be dissecting the minutes for any clues on when the tapering could begin. In the meantime, stocks continue to trade near their all-time highs. Whether we see more volatility remains to be seen. But after the stellar Q2 earnings season we just had, and the robust outlooks for Q3 and beyond, I'm expecting a lot more upside to go. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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