Why did U. S. stocks turn sharply lower after opening slightly higher on Tuesday?From a comprehensive market point of view, the reason is a normally inconspicuous economic data.

Consumer confidence cooled for the second month in a row in June, the lowest level since February 2021, according to a report released by the American Counsellor on Tuesday.Americans are increasingly pessimistic about the economy, jobs and income prospects as the Federal Reserve raises interest rates to contain price pressures.After the disappointing economic data, the three major stock indexes turned downwards.

In contrast to overnight US stocks, data released by the University of Michigan on Friday showed that consumer confidence hit its lowest level in June since the survey began in the late 1940s. Nearly 30 per cent of respondents expect US business conditions to continue to deteriorate in the second half of this year, the largest proportion since the depths of the financial crisis in March 2009. Surprisingly, almost all of the gains in U. S. stocks took place within an hour of the release of the figure.

Compared with the well-known non-farm payrolls data and the consumer price index, these two usually low-profile economic data now have an immediate effect on the US stock market. What is the meaning behind them?.

With private consumption accounting for nearly 70 per cent of US GDP, the steady expansion of consumption means that the US economy is still resilient. Therefore, the consumer confidence index released by the Economic Advisory Board and the University of Michigan has received considerable attention.

If consumers are confident in the future economy, their spending may increase, and the increase in consumer spending can promote economic growth. If the consumer confidence index is strong, it indicates that the trend of US economic growth is good.

American Consultative Council Consumer confidence Index

The consumer confidence index is mainly to understand the degree of consumer confidence in the economic environment, and to reflect consumers' views on the economy and their intention to buy.Higher indicators indicate higher consumer optimism.

University of Michigan Consumer confidence Index

The University of Michigan usually surveys the attitudes of 500 American consumers twice a month on economic prospects for the future, including personal finances, inflation, unemployment, government policies and interest rate movements. The report is divided into initial value and final value. The initial value is published around the 10th of each month, and the final value is announced at the end of the month. Usually, the initial value has a greater impact on the market.

The biggest difference between the data released by the Economic Advisory Bureau and the University of Michigan is that the former reflects "general private consumption" and "employment", while the latter reflects "durable goods consumption".

In the face of a return to volatility in US stocks overnightSome analysts have pointed out that in addition to inflation data, economic indicators are also the key to determining current monetary policy.If the downward pressure on economic growth increases further, it will force monetary policy to tighten and slow down. So the bad news is the good news.

In the near term, weak economic data will generally push up U. S. stocks, investors expect the Fed to slow the pace of monetary policy tightening because of the economic downturn, and even last week's sharp rebound was due to the lacklustre performance of economic data. However, the logic of the market seems to have changed again last night: "bad news" is "bad news".

In response, Bob Schwartz, a senior economist at the Oxford School of Economics, said that inflation talk in the market is cooling, recession stories are making headlines, and this shift in sentiment is spreading in financial markets.