The Italian services PMI fell to 49.2. Italy has the weakest new business formation in 44 months. 2018 GDP growth estimates for Germany have fallen from 2.5% in March to 1.6%.
Economic slowdowns result in more volatility in the stock market as it creates more uncertainty and increases the probability of a recession. As you can see from the chart below, the shaded bars are noted economic slowdowns by the ECRI. When the bars are shaded, there is more volatility. There have already been 2 corrections during this slowdown. Just because stocks recovered from the latest one doesn’t mean we are in the clear as the index is weakening almost every week.