Stocks slump, economic data weak

A sell-off that began early this morning in Europe quickly spread to U.S. markets amid lingering fears over European debt and concerns that the U.S. and European economies may be poised to enter a new recession.

The flight out of equities continued to bolster Treasuries, with the 10-year bond briefly falling below 2% for the first time ever, while gold also benefited from the fall in stocks.

In the meantime, the latest economic data did little to discourage a small but growing view that the U.S. economy is either poised to enter a new recession or may already be in a new slump.

The Philly Fed’s Business Activity Index fell an astonishing 33.9 points in August to -30.7, far below the level of zero, which marks the line between contraction and expansion.

Yes, the index can be volatile but there's little good to say about August's number.


Losses in the sub-components were broad-based, suggesting the survey is detecting serious weakness in the mid-Atlantic region.

In the meantime, existing home sales unexpectedly fell last month, continuing a downward trend that re-established itself early in the year.

A lack of confidence in the economic recovery, worries about prices and job insecurities played a role.  Additionally, the NAR expressed growing frustration that conservative appraisals are scuttling some deals.

All-in-all, rather disconcerting.