Charles Payne Will Be Hosting Cavuto on Fox Business Tonight at 8:00 p.m.
By Carlos Guillen
Equity markets are taking a small step back as investors wait to see what next week will bring in terms of economic data, which will include second quarter GDP, ISM manufacturing and, most importantly, employment data.
Quite encouraging today was that consumer sentiment not only landed higher than expected but also managed to reach the highest level in six years. The University of Michigan's Consumer Sentiment July result landed at 85.1, higher than the Street's expectation of 84.1, increasing from the 84.1 reached in June and reaching the highest level since July 2007 when it was 90.4. Given the close relation between consumer sentiment and consumer spending, this sudden improvement in sentiment over expectations may revive hopes that consumption may still be strong in the second quarter. As it stands, according to the most recent government data, personal consumption expenditures increased quarter-over-quarter by 2.6 percent in the first quarter, the most since the first quarter of 2011 when it was 3.1 percent. Consumer confidence had been slowly diminishing as it was becoming apparent that the recent increases in mortgage rates and prices at the gas pump were starting to frighten consumers, but this may no longer be the case in the short term. Perhaps a bit mixed was that the index of expectations six-months from now, which more closely projects the direction of consumer spending, declined to 76.5 in July from 77.8 the month before, but this final data point was a significant improvement over the 73.8 preliminary result.
At the moment investors appear to be in wait and see mode, and the consumer sentiment data presented today, while positive, was not enough to alleviate worries about next week's slew of economic data and continuing earnings releases. Adding fuel to the fire was the disappointing financial results from Expedia (NASDAQ:EXPE), and while earnings season has been rather encouraging, the Street did not take too well to the online travel giant's earning miss. The Dow was significantly lower in the early part of the morning's trading session; however, stocks have been recovering and may end in the green with some luck.