Why a tenuous market remains volatile is headlines versus realities.  When the ISM manufacturing report was released this morning, the markets, which were already in retreat, hastened the downside move.  The machines that sold were triggered by headlines that spoke to the last time the numbers were this low.

What the headlines didn’t speak to, but investors saw upon actually combing through the data, was continued overall expansion, strong bounces in key categories, including new export orders rebounding back into expansion mode.

There were lots of comments on tariffs, including higher cost, but this line caught my eye most:

“The threat of additional tariffs has forced a change in our supply chain strategy; we are shifting business from China to Mexico, which will not increase the number of U.S. jobs.” (Chemical Products)

Total construction was unchanged, as residential investment continues to decline; although, offset by record state and local spending on things like streets, lighting and schools.

Momentum Names under Pressure

Overall, the market is being weighed down by the Communication Services sector where Alphabet (Google) and Facebook (FB) are getting knocked around pretty good.  The selling is due to chatter that US government agencies circle both names, and investors brace for actions that would also mean huge fines.

• Federal Trade Commission looking into Facebook
• Department of Justice looking into Alphabet/Google

Other momentum names, such as Amazon (AMZN), which is on the governments radar too, are also under pressure this session.