Futures Point Lower On Disappointing Economic Data

The market has had a very nice 2-day rally. After Monday's session, I think few investors were prepared for that type of turnaround. More likely, the bears pressed their short positions, and when the rally started on Tuesday, many were caught leaning the wrong way.

Today there was a batch of economic news before the bell that was pretty weak, although I would argue that GDP figures are backward looking and thus it should not be surprising that they were weak.

The preliminary reading for second quarter GDP showed the economy grew at an annualized rate of 1.9%, which is below the widely expected second quarter growth rate of 2.3%, but up from the downwardly revised 0.9% growth rate registered in the first quarter.

The GDP Price Index climbed 1.1%, although economists projected a 2.4% advance. Separately, initial jobless claims for the week ending July 26 totaled 448,000, which is above the 393,000 that was widely expected. The prior week's claims were revised slighly downward to 404,000.

The dollar has also enjoyed a nice 2-day bounce, but is lower on this economic data. The weak dollar today will likely help gold and oil bounce, but it doesn't look like those commodities are ready to challenge their old highs yet.

Let's see if this market can shake off the early weakness as the session unfolds today. That would be a clear sign of strength for this market, and portend more upside, imo.