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The S&P 500 fell 2.9% last week. Today, it rallied 2.6% to 3678.43, back above the June 16 low of 3666. Why did it do so well today? Because sentiment is so bearish.
More fundamentally, bad news about the economy is good news for bonds and stocks. And this morning at 10:00 am the market moved higher on news that September's M-PMI fell to 50.9, the lowest since mid-2020 (chart). New orders fell to 47.1. Supplier deliveries (52.4) and backlog of orders (50.9) confirmed that supply disruptions have abated significantly. Perhaps most importantly, the prices-paid index fell to 51.7, suggesting that inflationary pressures are also abating.
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