U.S. economy turns in sluggish 1.5% second-quarter growth and inflation remains above Fed target

Context

U.S. economy turns in sluggish 1.5% second-quarter growth and inflation remains above Fed target  AP News U.S. economy slowed to 1.5% growth rate in Q2; June core inflation at 3.3%  CNBC U.S. Economic Growth Slowed to 1.5% in Second Quarter  WSJ US economy slowed more than expected as the Iran war took hold  ABC News - Breaking News, Latest News and Videos US economic growth slows unexpectedly in second quarter  Fox Business

What it means

A combination of below-expected GDP growth and above-target inflation — sometimes called stagflation — has historically been associated with broad equity weakness, as slow growth hurts earnings while sticky inflation prevents the Fed from providing relief through rate cuts. Gold has historically performed relatively well in such environments as investors seek both inflation protection and a growth hedge. (Lower-conviction channels were filtered out by our selectivity bar.)

Causal chain

• Exp. moveTimeframeConviction
• ↓S&P 500 (SPY)$741.69M1d

  Below-expected GDP growth raises stagflation concerns — slow growth with sticky inflation limits Fed's ability to cut rates

• ↓Nasdaq 100 (QQQ)$683.55M1d

  Stagflation environment pressures rate-sensitive growth and tech equities more acutely

Not investment advice · for informational purposes only. Generated 30 Jul, 13:55 UTC