Manufacturing Slump Sparks Recession Worries, But Broader Economic Picture Still Mixed
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The Empire State Manufacturing Index plunged to -43.7, indicating a sharp contraction in New York manufacturing activity and raising concerns about a possible recession.
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However, other economic indicators like GDP growth estimates still look relatively healthy, so the negative manufacturing report may not signal impending doom.
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Stocks fell on Tuesday, partly due to the weak Empire State report, but also potentially because the S&P 500 faces resistance around 4,800 which would require confidence in Fed rate cuts to break through.
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The Fed will likely start cutting rates at some point this year, but the timing is uncertain - March, May or June are all possibilities. This rate cut outlook should eventually catalyze a stock market breakout.
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For now, expect a trading range for stocks between support around 4,600 and resistance at 4,800, with heightened volatility on significant economic data releases.