Stocks Close Lower, Pullback Continues, But Is It Nearing The End?

Plus 5 Just-Added Strong Buys Stocks Close Lower, Pullback Continues, But Is It Nearing The End? [Kevin Matras - EVP - Photo] Profit from the Pros By Kevin Matras Executive Vice President Stocks Close Lower, Pullback Continues, But Is It Nearing The End? [Stocks Close Lower, Pullback Continues, But Is It Nearing The End?]Image: Bigstock Stocks closed lower yesterday with all of the major indexes down by -1.00% or more. Yesterday's pullback looked like a continuation from what we saw last week. Currently, the S&P is down -3.29% from their YTD high close from 3 weeks ago. The Nasdaq is down -5.06% from their YTD high close from 5 weeks ago. Stocks pull back roughly -5% on average of 3-4 times per year. So this is typical behavior. And after the recent runup, it's not surprising to see some profit taking. The question is how much more is left? Or is this it? We shall see. Yesterday morning's Retail Sales report rose more than expected, climbing 0.7% m/m vs. last month's upwardly revised 0.3% and views for 0.4%. Ex-vehicles & gas it was up 1.0% vs. last month's 0.4% and views for the same. Although, Home Depot's earnings yesterday morning tempered that bullish report after CEO, Ted Decker, said "uncertainties remain" and acknowledged that sales fell -2% last quarter, while reiterating their guidance suggesting a -2% to -5% drop in sales, and -7% to -13% drop in earnings for the year. But given yesterday's positive EPS surprise (+4.26%), and positive sales surprise (+1.58%), they finished up by 0.66% on the day. In other news, the Empire State Manufacturing Index fell to -19.0 vs. last month's 1.1 and the consensus for -0.4. Business Inventories were flat at 0.0% m/m vs. last month's downwardly revised 0.0% and views for 0.2%. And the Housing Market Index slipped to 50 vs. last month's 56 and estimates for the same. Today we'll get MBA Mortgage Applications, Housing Starts and Permits, the Atlanta Fed Business Inflation Expectations, and the FOMC Minutes from last month's meeting. And we'll get another 99 companies set to report, including Cisco, retailers TJX Companies and Target, and Chinese heavyweights Tencent and JD.com. The jury on what the Fed does next on rates is still out. Last week's inflation reports favors a further tightening given the modest decline in one and the slight uptick in the other, showing the stickiness of inflation persists. We'll get another look at inflation on August 31, with the Personal Consumption Expenditures (PCE) index, which is the Fed's preferred inflation gauge. But that's still 2½ weeks away. Whether the Fed hikes again or not, it's pretty clear they are nearing the end of their rate hike cycle. The real questions are how long will rates stay at that level (wherever they end up), and can the economy manage a soft-landing while it happens? In the meantime, traders will focus on the economic reports that come out before then, as well as earnings. And for signs that the recent pullback is over. See you tomorrow, [Kevin Matras - Signature] Kevin Matras Executive Vice President, Zacks Investment Research Sponsor [A 100% Win Rate In 2022...]( [image]( The next 10 minutes could change your life. We've recorded a special sit-down interview with a reclusive millionaire who details how he's closed out winning trade after winning trade throughout the volatility of 2022. In fact, he hasn't closed a single losing trade since 2016. Sounds impossible? It's not – and he'll prove it to you. [Click to see this exclusive sit-down interview.]( Most Popular Articles from Zacks.com [AI "Gold Rush": Focus on 3 Stocks Selling the "Picks"]( Investors looking to cash in on the AI revolution have two choices: bet on a company they think can win the AI race, or bet on the companies necessary to run AI. 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