Tuesday’s weaker than expected consumer confidence data cast an ominous shadow over stocks and nearly extinguished positive sentiment including hopes that the downward spiral may be moderating. To make matters worse the resulting sell-off in the market was broad and hit all of the S&P's ten sectors.
"(The consumer confidence data) kind of took the wind out of things a little bit," explains Kevin Kruszenski of KeyBanc. “This one kind of came out of left field."
Now, even the most bullish investors are starting to wonder if Tuesday’s sell-off signals a longer market pause.
And they may get their answer as soon as Thursday with the latest employment data. According to Reuters estimates, the unemployment rate is expected to rise to a 26-year high of 9.6 percent from May's 9.4 percent.
Weak employment data is hardly new, but this latest batch of numbers could be particularly damaging as mounting U.S. job losses have been weighing on consumer spending -- a pillar of economic growth. As you might know, consumer spending accounts for more than two-thirds of economic activity in the United States.
So how should you trade?