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Wednesday Market Note: Manufacturing Signaling a Double Dip?

In has thus far been a pretty quiet summer week on Wall Street, despite being smack in the middle of earnings season. Volume has been low, indicating that investors aren't willing to wager that the economy is simply slowing, versus headed for a double dip.

The news this morning doesn't clarify the outlook: durable goods - items meant to last longer than three years - tumbled one percent, from -0.8 percent in May. It was the largest drop since August, 2009. Economists also measure durable goods without transportation because that sector is so volatile. Without transportation, the decrease was 0.6 percent from up 1.2 percent in May.

The report begs the question: can the economy recover with weakening manufacturing? The durable goods report, along with yesterday's Richmond Fed survey, paint a picture of slowing growth in the manufacturing sector is slowing. Manufacturing has been touted as one of the leading sectors of the economic recovery.

But there was one bright spot in the durable goods report and that was capital orders. Orders and shipments for non-military capital goods, excluding aircraft climbed 0.6 percent in June, after jumping 4.6 percent in May. This could be a signal that business investment could see improvement over the next two quarters.

Bottom line: with growth slowing at an as-yet undetermined rate, investors are taking the wait and see approach