08-05-2022, 10:35 PM
Quote:This key indicator of economic health is currently at 52.8 — down from as high as 63.7 in early 2021, and at its lowest level since the early days of the COVID-19 pandemic lockdown. As my MarketWatch colleague Jeffry Bartash reported, this latest reading is “a sign of creeping weakness in the U.S. economy.” Many bears have pounced on this latest reading as a reason to expect further weakness in coming months. They point out, with substantial historical supporting evidence, that corporate earnings tend to follow the lead of the ISM index with a several month time lag. But that most definitely does not mean equities will follow. The stock market’s current level already incorporates the bad earnings significance of the ISM’s latest report. The bears’ argument would be justified only if they could show that the market systematically ignores or misinterprets that significance. What the plunging ISM index really tells us about what's next for the stock market