The market is heading lower to start what is historically the worst trading month of the year. Investors are taking profit and digesting several economic data points that were released this morning (more below).

All components of the Magnificent Seven are falling. While the heat map is mostly red, there are some green patches in Health Care (XLV), Energy (XLE), and Consumer Staples (XLC).

Technology (XLK) is the worst performing and being led lower mostly by semiconductors names.

In other news, the long awaited Klarna IPO revived its plans for its initial public offering and hopes to raise as much as $1.27 billion, in a listing that would value the company at up to $14 billion. The company plans to list its shares on the NYSE under the ticker “KLAR.” The date is still unspecified.

 

The gap in the two-tier nature of the economy has been widening. Sentiment among households making between $50,000 and $100,000 and those earnings below $50,000 are sitting near lows, while high earners have continued to be more optimistic.

Having said that, credit card delinquencies have risen to a 14 year high, further signaling the need for a rate cut to help Main Street.

Economic Data

Construction spending declined 0.1% M/M in July, decelerating from Junes 0.4% decline and in-line with expectations. Private spending overall fell to 0.2%, as residential construction rose by 0.1%, but was offset by a 0.5% decline in nonresidential spending. Meanwhile, public construction rose 0.3%, partially offsetting the decline in private spending.

ISM Manufacturing PMI increased to 48.7 in August from 48 in July, but missed forecasts of 49. This marks the 6^th straight month of contraction.

Notable Points:

• Production fell to 47.8 from 51.4
• New Orders rebounded to 51.4 from 47.1
• Employment eased to 43.8 from 43.4
• Customer inventories declined to 44.6 from 45.7
• Order Backlogs were reduced to 44.7 from 46.8
• The Price Gauge eased to 63.7 from 64.8

Following this morning’s economic data, the Atlanta Fed GDPNow for Q3 fell to 3.04% from 3.47%.

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