Economic activity slowed by 0.6% in the second quarter

Yahoo Finance Live anchors discuss second-quarter GDP.

Video transcript

[AUDIO LOGO]

BRIAN SOZZI: Anyway, here are a couple of things you need to kick off your day. On the economic agenda this morning, the third and final reading for second quarter GDP came in at a decline of 6/10 of percent.

And guys, I think this probably already confirms what Julie was talking about just in the markets, just continued downturn in markets. Investors scared about the economic slowdown and getting worse. How can it get any better in this current quarter when rates are higher than they were in the second and first quarter?

BRAD SMITH: Right, and then the larger implication of longer extended protraction-- or contraction, excuse me, in GDP. That, particularly, is gonna be something that consumers are paying closer attention to over time, even if the confidence is not necessarily waning like we thought it would. We got a better-than-expected consumer confidence reading earlier this week.

It's a larger question of, how that will kind of throw off, if we can use this term, the vibes, more broadly, when you've got more consumers that are paying close attention to GDP and where, potentially, that also nets out for the rest of the economic considerations?

However, as of right now, if we're kind of parsing this with the market activity and that bitty-bounce that we saw yesterday, I mean, that's probably not gonna be extended too much into today considering the futures. We'll see exactly where things open and end.

But looking through some of those basic sectors that would really be looked at as defensive plays right now, the necessities even. You know, that's where I continue to kind of keep my eyes on, because in energy, communication services, these necessities that people need, that's so directly correlated with GDP as well. That's exactly where the consumer is gonna have to continue to pay. But at what prices are they gonna pay over an extended period of time, too?

JULIE HYMAN: Right, are we gonna continue to see these elevated inflation readings? Got to look at all of these capitulation signals that people were looking for over the past couple of days ahead of yesterday's bounce, right?

Bernstein folks are looking at one sentiment indicator that they created that's a proprietary indicator. And they said, another bear market rally is very possible because investor sentiment has reached such negative levels. And we're hearing, you know, sort of signs of that from Wall Street, that we could see a bounce from these levels. We don't know how long that bounce could last, right?

BRIAN SOZZI: But what would be the catalyst be? It's hard to see the--

JULIE HYMAN: Sometimes there's no catalyst--

BRIAN SOZZI: It just happens.

JULIE HYMAN: --right? It just happens.

BRAD SMITH: Well, relief, perhaps.

JULIE HYMAN: That the selling sort of exhausts itself, right? And people decide that something is priced in. So sometimes-- yes, I usually ask that question, too. What's the catalyst?

BRIAN SOZZI: I was trying to be you.

JULIE HYMAN: But now I've been doing this--

BRIAN SOZZI: I was playing the other side of this.

JULIE HYMAN: But now I've been doing this long enough that I know, sometimes there's no clear catalyst.

BRIAN SOZZI: It just happens.

BRAD SMITH: Yeah, and I mean--

JULIE HYMAN: Like, what was the catalyst yesterday?

BRIAN SOZZI: Well, I thought the B-of-E-- BL--

JULIE HYMAN: Yes, that was-- true, good point.

BRIAN SOZZI: --stepping-- Bank of England stepping in--

JULIE HYMAN: Yes.

BRIAN SOZZI: --buying bonds.

BRAD SMITH: Sure.

BRIAN SOZZI: That led to a market rally. But look at the close and then look at our open. I mean, the futures today have gotten completely-- not off the rail-- off the rails. I'm looking at Dow futures on our site now down over 300 points. And it's ugly. It's terrible.

BRAD SMITH: Well, it's the solid reminder, too, that the markets are gonna price in the actuality of something happening or occurring well before that event actually takes place. Now, the reality of that on the other side is, too, we don't know exactly when the depths or the kind of hardest impacts from a recession would be felt from a consumer perspective and a business perspective, too.

And so now the markets are doing the best that they can to adequately kind of-- if you will, kind of correlate to what that move would look like in the future. And how far out? Well, we've been talking about mid-2023 at this point, with some of our guests.

BRIAN SOZZI: It's going to be a terrifying earnings season. I just said it, it's going to be terrifying. We'll talk about some movers later.

JULIE HYMAN: Either that or--

BRIAN SOZZI: We got CarMax--

JULIE HYMAN: --they are-- everyone who is going to come--

BRIAN SOZZI: We got Apple.

JULIE HYMAN: --out with terrible news already pre-announced it and the earnings season will be fine.

BRIAN SOZZI: Oh, it's terrible, awful.

JULIE HYMAN: No?

BRIAN SOZZI: Save the date, today. It's gonna be an awful earnings season. Got into everything, awful.

JULIE HYMAN: All right, we'll see.