Markets Dipped On Bad China Data, Will The Fed Bring Good News? (Weekly Cheat Sheet)

Last week saw the stock market navigating tumultuous waters mainly due to China data and slowing tech. Are investors bracing for a larger storm on the horizon? Or was this just a minor squall before clearer skies?

The Backdrop:

Investors found themselves grappling with multiple pressures:

  • Rising market rates: These often act as a dampener for stock prices, especially for high-growth companies.
  • Global growth worries: China’s economic data hinted at a slowdown, leaving many to question the ripple effects.
  • Tensions from the Federal Reserve: Fed Chair Powell’s FOMC minutes and subsequent remarks underscored inflation concerns.

Let’s dissect these forces.

China’s Troubling Economic Signals

One can’t discuss global economic sentiment without talking about China, can they? The world’s second-largest economy offered a mixed bag:

  • Weaker than expected retail sales and industrial production data for July.
  • A decline in home prices.
  • The high-profile filing for Chapter 15 bankruptcy protection in the U.S. by property developer Evergrande.
    • Is this indicative of a larger, underlying issue in China’s property sector?

On the flip side, the People’s Bank of China took measures to combat the slowing economy, including:

The U.S. Picture: A Tale of Two Forces

The U.S. economic landscape painted a varied picture:

  • Strong signals: July saw stronger-than-expected housing starts and industrial production. Furthermore, the Atlanta Fed’s GDPNow model hinted at an upbeat 5.8% real GDP growth for Q3.
  • Worrying trends:
    • Bank stocks took a hit. Fitch Ratings‘ warning of potential downgrades, hot on the heels of Moody’s similar move, undoubtedly ruffled feathers.
    • The market also got hints of potential hikes from the Federal Reserve. But is this premature?

Stocks in the Spotlight

While the market broadly trended downward, individual stocks and sectors had their own stories:

  • Cisco (CSCO) and Home Depot (HD) emerged as the week’s darlings post their earnings reports.
  • Walmart (WMT), on the other hand, found itself on the opposite end of the spectrum.
  • Target (TGT), TJX Cos. (TJX), and Applied Materials (AMAT) also found favor among investors.

So, what’s next for these companies? And will their trajectories mirror the broader market or carve their own paths?

Where Do We Go From Here?

Investors are now left pondering several pressing questions:

Only time will provide clear answers, but one thing’s for sure: Investors are buckling up for what promises to be an eventful end to 2023.


  • Tuesday: Existing Home Sales (July)
  • Thursday: Durable Goods Orders (MoM) (July)


As the week unfolds, the financial world keenly anticipates the annual Jackson Hole Economic Symposium. The limelight falls primarily on the Federal Reserve and its Chairman, Jerome Powell. His much-anticipated speech on Friday is predicted to shed light on the bank’s perspective for the closing quarter and the start of 2024. The Fed’s recent inclination toward potential rate hikes suggests possibilities of more such hikes. However, any variance from this view in Powell’s address might stimulate the bond markets, suggesting a halt or perhaps a conclusion to rate elevation.


Because of the varied earnings outcomes from retail heavyweights last week, there’s heightened interest in discerning consumer sentiment and expenditure patterns. Key retailers set to reveal their earnings this week include BJ’s Wholesale Club (BJ), Lowe’s (LOW), Macy’s (M), Kohl’s (KSS), and Dollar Tree (DLTR). Moreover, Nvidia (NVDA), the tech giant that has captured attention for its robust performance, mainly attributed to AI breakthroughs, will present its earnings on Wednesday.


Abroad, investors are especially attentive to the fresh Purchasing Managers’ Index (PMI) figures emerging from the U.K. and the eurozone this week. The European economic landscape is grappling with issues like high costs and reduced production, further intensified by diminishing demand, causing a considerable economic downturn. The service sector, which often compensates for dips in manufacturing, isn’t exempt from this pressure. Declining PMI data might intensify calls for institutions like the Bank of England and the European Central Bank to reconsider their prospective rate increments.


While this week’s economic agenda might seem somewhat limited, several emerging trends deserve investors’ attention. Firstly, there’s growing speculation about China potentially implementing a major reduction in its prime lending rate, providing relief to its beleaguered property market. Concurrently, the rebound in fuel prices could challenge the prospects of further diminishing inflation as we transition to autumn.

Presently, the average cost per gallon of gasoline sits at $3.87, an increase of 31 cents from the previous month and just shy of the prices seen during this period in the prior year. Moreover, the Nasdaq Composite’s recent downturn, marking its third successive weekly drop, hints at a possible alteration in the investors’ disposition towards the technology domain. The erstwhile seemingly unstoppable tech surge now seems to be decelerating, potentially due to rising apprehensions regarding a probable gentle deceleration in the economic realm.


Last week, the bond market saw significant fluctuations largely driven by concerns over the Federal Reserve’s upcoming decisions and broader economic indicators. This period of heightened volatility was marked by the Federal Reserve’s aggressive rate hikes and a downgrade in the country’s ratings, causing uncertainty among investors. This sentiment was further evidenced by the notable rise in 10-year Treasury yields, which hit a two-week high, as traders adjusted their positions in anticipation of the Federal Reserve’s impending decisions.

Specifically, the 10-year yield climbed by 12 basis points, settling at 4.16%, and the secondary bond market saw a dominance of bonds being sold at a premium. Concurrently, while the Consumer Price Index (CPI) data release led to volatile trading in 10-year Treasury yields, U.S. stocks remained relatively stable. Moreover, investment-grade corporate bonds, with a pronounced focus on the auto sector, lagged behind Treasuries during the week, even though this sector was at the forefront of the week’s bond issuance. The collective events of the week underscore the market’s heightened sensitivity to inflation, interest rate shifts, and other pivotal economic metrics.


Oil & Energy

Chinese refiners reached a landmark in their activities, processing and importing crude oil at record volumes during the first half of 2023. Meanwhile, there was a notable decrease in oil inventories in the United States, with a reduction of 6 million barrels. This substantial drop was attributed to an uptick in refining activities. Furthermore, the U.S. saw its domestic crude production surge to the highest levels observed in the past three years.

Precious Metals & Gold

A minor decline in the U.S. dollar and bond yields prompted this rise. Despite this movement, gold was on track for its fourth consecutive weekly fall. By the end of this quarter, gold is projected to trade at 1911.63 USD/t oz. Furthermore, a recent dip in the gold price was attributed to the U.S. dollar’s recovery from a 7-week low.


Cryptocurrency and Bitcoin markets have been experiencing significant downturns. A few days ago, cryptocurrency prices traded lower, with major digital currencies such as Bitcoin and Ethereum dropping to two-month lows. Bitcoin’s price, in particular, suffered a nearly 9% drop since early Thursday amidst a broader sell-off of risky assets. Contributing to the negative sentiment was a report regarding Elon Musk’s company, SpaceX, abandoning its cryptocurrency endeavors.

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