Dow futures rise slightly after the top three averages hit a second day of losses

Despite Fedspeak on fighting inflation, ‘easing cycle’ is emerging, says Leuthold’s Jim Paulsen

Jim Paulsen, chief investment strategist at Leuthold Group, said that despite the Federal Reserve’s “continued lip service to fight inflation” by tightening monetary policy, there are several factors that indicate the market may be entering an “emerging easing cycle.”

Bond yields have hit a sharp rate cut, the dollar is finally rolling and junk spreads have narrowed, he said in a note to investors on Tuesday. In addition, monetary and fiscal growth is also likely to become more accommodative soon, as Fed Chair Jerome Powell hinted in comments last week.

“The media, policymakers and investors are mainly focused on the war on inflation and how aggressively the Fed will have to maintain rate hikes,” he said. “But with real economic growth already slowing to a snail’s pace and indications that inflation is slowing, the plea for further tightening by the Fed at its September meeting is rapidly disintegrating.”

“Investors should place the appropriate weight on economic policy leadership,” he added. “Tightening today means lower real and nominal growth tomorrow. The deep tightening of most economic policies started in March 2021.”

— Tanaya Macheel

MatchGroup Shares Plunge After Hours

Shares of dating app operator Match Group plunged a whopping 23% after the company reported second-quarter revenue of $795 million, compared to FactSet estimates of $803.9 million. Match also provided weak guidance on adjusted operating income and revenue for the current quarter.

— Tanaya Macheel

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