Marc Pado Comments: Stocks Fall As Fed, Durable-Goods Illustrate Slowdown

July 28, 2010, MarketWatch

U.S. stocks fell Wednesday after downbeat economic reports had Wall Street second-guessing expectations for economic growth in the second quarter, with that data coming in two days.

The major stock indexes furthered their slide after the Federal Reserve's anecdotal take on the economy.

While the Fed's assessment held little surprise, the market's reaction had more to do with what the Beige Book and the durable-goods data imply for Friday's report on gross domestic product, said Marc Pado, U.S. market strategist at Cantor Fitzgerald. 'With the estimate of 2.5% floating around for GDP, people held on, despite the durable-goods drop, waiting to see if the Fed was more or less optimistic,' said Pado. . 'We're probably closer to 2% than 2.5%, so sell now and maybe buy Friday on that weak number,' Pado added.

For every stock that gained two fell on the New York Stock Exchange, where volume topped 1 billion shares. Composite volume neared 4.2 billion. 'Volume is very light, and a lot of it is being driven by day traders,' said Pado. Ahead of Wall Street's open, the Commerce Department reported orders for U.S. durable goods last month fell 1%, countering expectations of a 1% gain. 'The market is very sensitive to the pace of economic momentum,' said Nick Kalivas, equities and fixed-income analyst at brokerage MF Global. Investors are 'getting comfortable that earnings were pretty constructive for last quarter; we need to have something that breaks that momentum,' said Kalivas of expectations now baked into investor thinking.