Wall Street Swings Back to Earlier Cuts With Cool Data

The ceaseless drumbeat of economic data that’s pushed rate-cut prognosticators from pillar to post and back again is sounding a favorable note as far as Wall Street is concerned. A string of reports this week pointed to a slow start for the US economy in the second quarter, and that’s good news for a Federal Reserve looking for signs it can cut interest rates without jeopardizing chances of a soft landing. The turbocharged US economy, fueled by consumer spending and near-record employment, has managed to repeatedly send Team Recession packing. But it hasn’t been all that helpful when it comes to cooling down prices. Now it seems that new US home construction and manufacturing have been weaker than expected while retail sales took a steep dip. Can it be any surprise then that underlying inflation dropped for the first time in six months? Investors were predictably elated and stocks touched a record. Still, if for whatever reason you don’t like these numbers, wait awhile. There are always more on the way. “The US economic data have consistently landed on the low side of expectations of late, suggesting the economy is losing momentum in the face of restrictive monetary policy,” says Sal Guatieri, senior economist at BMO Capital Markets. “But the jury remains out on how quickly inflation will subside to provide some rate relief.”