Why a Booming Economy Just Sent Stocks Lower Ahead of PCE
★ ELITE MARKET POINT
Market Intelligence That Moves With You
Rate Shock • Before The Bell
The Economy Got Stronger. That’s Why Stocks Fell.
A PMI showing the best business activity in five years sent the 10-year to a 19-year high. In a rate-hiking Fed, good news is now bad news. Here is Thursday.
Thursday, September 24. The 10-year is back above 5.1%, small caps just fell hardest, and PCE is six days out. The rule flipped: strong data is now a market risk.
Key Idea
The rule just flipped. Wednesday the economy looked strong, and that is exactly why stocks fell. A new PMI showed business activity at its best in more than five years. That is a survey of how busy companies are. Good news. But it told bond traders the Fed is not done. The 10-year Treasury yield rocketed to 5.106%, a 19-year high. Stocks sank across the board. The Russell 2000 fell 1.6%, the worst of the major indexes. In a Fed that is still hiking, strong data is now a market risk.
Below is an important message from one of our highly valued sponsors. Please read it carefully as they have some special information to share with you.
Consider this your notice.
Here’s what’s happening.
I believe 1,806,000 Americans are going to be millionaires in the coming years from this.
Almost nobody knows about this yet.
Elon buried his next move in a government filing and said nothing.
I found it and I believe it’s his biggest play yet, and I’ll show you the whole thing…
Why he’s hiding it, and what to do before the 25th.
Here’s what’s happening.
I believe 1,806,000 Americans are going to be millionaires in the coming years from this.
Almost nobody knows about this yet.
Elon buried his next move in a government filing and said nothing.
I found it and I believe it’s his biggest play yet, and I’ll show you the whole thing…
Why he’s hiding it, and what to do before the 25th.
It’s completely FREE to watch. No purchase. No credit card.
The clock’s already running. Don’t let it run out.
Sincerely,
James Altucher
The clock’s already running. Don’t let it run out.
Sincerely,
James Altucher
Good News, Bad Tape
For two days, falling oil and steady yields carried this market to the edge of a record. Wednesday, one number undid it.
S&P Global’s flash PMI came in hot. Business activity is running at a five-year high. On any normal day, that is what you want to see. Instead, the 10-year yield jumped to 5.106%. The 5-year touched 5% for the first time since 2007. Yields rose clear across the curve.
Stocks followed them down. The S&P 500 fell 0.73%. The Nasdaq lost 1.11%. The Russell 2000, the small-company index that led just two days ago, dropped 1.6%. More than 7 in 10 stocks fell. Energy was the only sector that rose.
We told you Wednesday the same rate wire could cut as fast as it lifted, and that small caps would give back the most. Wednesday it did, and they did.
S&P Global’s flash PMI came in hot. Business activity is running at a five-year high. On any normal day, that is what you want to see. Instead, the 10-year yield jumped to 5.106%. The 5-year touched 5% for the first time since 2007. Yields rose clear across the curve.
Stocks followed them down. The S&P 500 fell 0.73%. The Nasdaq lost 1.11%. The Russell 2000, the small-company index that led just two days ago, dropped 1.6%. More than 7 in 10 stocks fell. Energy was the only sector that rose.
We told you Wednesday the same rate wire could cut as fast as it lifted, and that small caps would give back the most. Wednesday it did, and they did.
What Elon is doing in AI is exactly what he’s done his entire career.
He took over mobile payments with Paypal. Electric cars with Tesla. Commercial space launches with SpaceX.
Now he’s doing it with Artificial Intelligence… and James Altucher believes we could see as many as 1.8 MILLION new “musk millionaires” over the next decade from his impending AI takeover.
According to James Altucher, there’s one company sitting at the dead-center of his plan… and it’s still trading for less than $100.
James compiled all critical details you need to position yourself early into this FREE Millionaire Maker Masterclass.
He took over mobile payments with Paypal. Electric cars with Tesla. Commercial space launches with SpaceX.
Now he’s doing it with Artificial Intelligence… and James Altucher believes we could see as many as 1.8 MILLION new “musk millionaires” over the next decade from his impending AI takeover.
According to James Altucher, there’s one company sitting at the dead-center of his plan… and it’s still trading for less than $100.
James compiled all critical details you need to position yourself early into this FREE Millionaire Maker Masterclass.
Why Strong Data Hurts Now
Here is the mechanism, because it will run all fall.
The Fed hiked last week and told you more may come. So every data point now gets read through one lens: does this make another hike more likely? A booming PMI does. Traders sold bonds, yields jumped, and the discount rate on every stock went up with them.
So what. In this regime, good news for the economy is bad news for your portfolio, at least until inflation clearly cools. That is the opposite of the last two years. The reflex to buy strong data will burn you here.
Notice which stocks bled most. Not the cash-rich giants. The small caps and the borrowers. Higher-for-longer is a tax on anything that needs to refinance.
The Fed hiked last week and told you more may come. So every data point now gets read through one lens: does this make another hike more likely? A booming PMI does. Traders sold bonds, yields jumped, and the discount rate on every stock went up with them.
So what. In this regime, good news for the economy is bad news for your portfolio, at least until inflation clearly cools. That is the opposite of the last two years. The reflex to buy strong data will burn you here.
Notice which stocks bled most. Not the cash-rich giants. The small caps and the borrowers. Higher-for-longer is a tax on anything that needs to refinance.
When Good News Turns
Here is the reframe that matters. For fifteen years, a strong economy meant buy stocks. The Fed had your back. That deal is off. With the Fed still fighting inflation, a hot report now pushes rates up and stocks down in the same session. Wednesday proved it in real time: the best business activity in five years knocked more than seven of every ten stocks lower. Until PCE on September 30 shows inflation cooling, treat every strong number as a yield risk first and a growth story second. The tell is not the S&P. It is the 10-year. When it stops rising, the all-clear comes. Not before.
Three Ways Thursday Goes
Base
Yields hover near 5.1% and the tape stays defensive. Favor what works when money is expensive: energy (XLE) and Exxon (XOM), the only sector green Wednesday, plus cash-rich mega caps like Microsoft (MSFT) and Nvidia (NVDA). Park idle cash in short-term Treasuries paying near 5%. Consumer sentiment’s final read lands Friday at 10 AM and is the next yield catalyst.
Upside
A soft sentiment print Friday or calmer Fed talk pulls the 10-year back under 5%, and the names that fell hardest bounce hardest: small caps (IWM), homebuilders (XHB), and regional banks (KRE). That is the relief trade. But it needs the data first. Do not buy the dip in rate-sensitive names before the yield actually turns.
Risk
PCE on September 30 runs hot on top of this PMI and the 10-year pushes toward 5.25%. This is not a one-day scare. It is a strong economy meeting a hawkish Fed, and that combination lasts. Expect another 3% to 5% down in the Nasdaq and worse in the Russell 2000. Keep the cash cushion. In this regime, dry powder is a position.
Our View
On Wednesday we said the rally ran on two engines and one report could stall both. Wednesday the yield engine roared the wrong way and took the tape with it. Now the new read. The market has switched to a rule most investors have not traded in fifteen years: strong data lifts yields and sinks stocks. So stop cheering the economy and start watching the 10-year. Between now and PCE on September 30, keep your winners, lean on energy and cash-rich quality, and hold the short-duration cash that pays you to wait. Friday’s sentiment number at 10 AM is the first test. If yields fall on it, the record is back in play. If they rise, Wednesday was a preview.