Equities sold off again this week, taking their cue from weakness that began during the Federal Open Market Committee (FOMC) press conference. The S&P 500 was down 4.4%, while emerging market equities fell 3.5%.
It has been another week with no resolution in congressional stimulus discussions. The positive economic numbers we see may have led to a false assumption the economy is on better footing than it really is.
Equities suffered three days of big losses but were bookmarked by a bounce to end the week. The sell-off lacked an easy scapegoat, but a lot of chatter in the financial markets pinned the blame on excessive option buying in the technology sector, that then gave way to an air pocket once the activity dried up.
The preliminary GDP numbers for the second quarter were released this week. The decline in the quarter was adjusted from 32.9% to 31.7%. A 1% adjustment in GDP growth used to cause panic among economists.