What a wild week! Perhaps the wildest we’ve seen in years, with a 5.3% plunge over the course of the first two days of last week more than wiped away by the 6.4% rebound seen over the course of the last three. We’re still in the hole by more than 5% since the pullback started two weeks ago, but given the swings we’re clearly capable of making now, that gap could be closed in just a couple of days.

On the other hand, volatility is a two-way street – we could just as easily be seeing new multi-month lows two days from now.

We’ll dissect the market’s key indices below, as usual, but also as usual, we want to paint a bigger picture using the broad brush strokes of economic data.

Economic Data

We got a fair amount of economic news last week, but none of it as curious or compelling as Q2’s second (of three) reading on GDP growth. Rather than GDP rising 2.3% last quarter as first expected, it actually grew 3.7%. It could change again with the third revision, but the number rarely changes between the 2nd and 3rd look.

GDP Growth Chart

Source: Thomas Reuters

This strong figure has several implications, not the least of which is the fact that it gives the Fed a little more reason to go ahead and raise rates in September. The futures market says there was only a 28% chance of a September rate hike, although the number changes daily.

The strong GDP growth rate also begs the question, if the energy sector has been in contraction and the U.S. dollar has been such a headwind for U.S. multinationals, why was economic growth so strong? For that matter, if the economy is so strong, why is inflation still so tepid?

The answers will come in time.

The only other data of real interest from last week was an update on real estate prices. Though both figures are from June, both the Case-Shiller Index and the FHFA Housing Price Index say valued remain on the rise. The Case-Shiller Index was up 5.0% on a year-over-year basis, while the FHFA’s reading rose 0.2% from May’s level.