Stocks End Lower, But Off Their Lows Of The Day  Image: Bigstock Stocks closed lower yesterday, but off their lows of the day. The Nasdaq led the way giving up -1.06%. MBA Mortgage Applications fell -2.9% w/w with purchases down -2.1%, and refi's down -4.7%. The International Trade in Goods and Services report showed the trade deficit widen to -$65.0 billion vs. last month's -$63.7B, although it beat expectations for -$68.0B. The PMI Composite report came in at 50.2 vs. last month's 50.4. The Services Index declined to 50.5 vs. last month's 52.3 and views for 51.0. The ISM Services Index, however, rose to 54.5 vs. last month's 52.7 and estimates for 52.4. And the Beige Book report showed the economy grew at a modest pace last month with leisure travel picking up, but nonessential consumer spending slowing. In other news, we heard from Boston Federal Reserve President, Susan Collins, who said the Fed was "well positioned to proceed cautiously" regarding future rate hikes. She continued by saying the Fed might be "near or even at the peak" regarding interest rates. But she followed that by saying "further tightening could be warranted" if progress on inflation turns out to be "fleeting." And she says the Fed remains data dependent. We'll get two more inflation reports next week: the Consumer Price Index (CPI) on September 13, and the Produce Price Index (PPI) on September 14. The Fed's next FOMC meeting takes place the week after that on September 19-20. The expectation for another rate hike in September has fallen to 5%. But the outlook for another tightening in November comes in at roughly 40%. All eyes will be on next week's inflation reports. In the meantime, today we'll get Weekly Jobless Claims, the Productivity and Costs report, and the Quarterly Services Survey. We'll also see if the recent pullback, after the last 2-week rally, has run its course and is ready to head back up. Statistically, the odds favor a rally. Since 1950, if the S&P is up by more than 15% thru August (it was up 17.4% this year), with August being down (which it was), then September is typically up with a median gain of 3.3%, and a win ratio of 86% (6 out of 7 instances). Moreover, if the market is up more than 10% thru July, and August is down, the remainder of the year is up 100% of the time with an average gain of 9.9% (median of 8.7%). So the probabilities are on the bull's side. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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