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On Thursday, CPI, or consumer price inflation data, is reported at 8:30 a.m., as are initial jobless claims and the Empire State survey. The Philadelphia Fed survey is at 10 a.m. ET.
"I think it's the data right now. The data is driving GDP forecasts lower. Everybody's lowering those forecasts," said Don Townswick, head of equities at global investment management firm, Conning. "Our shot at getting a decent trend for the third quarter, I think, is virtually gone. Even if company earnings come through, they're going to be, I guess, bottom line good earnings, but top line not good. So back to the fear that we're losing growth."
Economists slashed GDP estimates after weak business inventories Thursday, and the average forecast fell to third-quarter growth of 1.7 percent, according to a CNBC/Moody's Analytics survey. That compares to growth of 3.9 percent in the second quarter.
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"All the levers that would change me from a bull to a bear have been pulled," said Townswick. He said several weeks ago that he was still positive, but the Fed failed to raise interest rates in September, creating more uncertainty; earnings news began to look soggy and economic data softened.
"I think the market might be going into the woods," he said. "We might have been in the open prairies in 2012 through 2014." But he said that if growth rolls over, that will raise warnings flags on corporate profits and hurt stock prices.
Thomson Reuters reports that 81 percent of the S&P 500 companies reporting so far beat earnings estimates, but just 50 percent have beaten on revenues. Another 50 percent missed revenue forecasts. Companies in the S&P 500 are expected to report an average earnings decline of more than 4 percent for the third quarter.
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Besides Goldman and Citigroup, Thursday's early-morning earnings include US Bancorp, Blackstone, KeyCorp, PPG Industries, Charles Schwab, First Republic Bank, UnitedHealth, Taiwan Semiconductor and Winnebago. After the bell, reports are expected from Mattel, Schlumberger, Western Alliance, People's United Financial and WD-40.
As stocks sold off Wednesday, buying in Treasurys drove yields lower. The 10-year yield settled at 1.975 percent, a five-month low. "The manufacturing indexes will be interesting from the perspective that for the last few months there have been poor readings. Everyone is universally on the side of manufacturing is going to struggle as long as commodities are weak," said Tom Simons, money market economist at Jefferies.
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Simons said he expects to see CPI core up 0.2 percent, while consensus is at 0.1 percent.
"Gas prices are going to continue to weigh on the headline, but we're pretty optimistic on the core," he said.
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