With Nvidia (NVDA) still chopping around sideways, stocks need economic data to thread the needle for a big break higher. That would mean services ISM well above 50 with prices paid coming down, and a jobs report that meets expectations without a spike in wages.

The economy isn't too much different than at the start of the year, but it has worsened on the margin. One key factor is that expectations just got too optimistic coming into this year, and now data are disappointing. The Citi economic surprise has been negative and worsening for weeks, and now economists are revising growth expectations lower. Unemployment continues to creep slowly higher, manufacturing remains in a rut, and the number of job openings is shrinking.

A practical way to see how things have changed is to look at the number of people leaving their jobs for new ones. As JOLTS now shows about 8 million jobs available, a few million lower than the start of the year, the number of job switchers has declined notably. It's a good characterization of an economy that is still stable but softening.

The catch is that inflation is still above the Fed's target. That means our central bank is still moving at a much slower pace than the rest of the world to lower rates, keeping the U.S. dollar elevated and preventing bond yields from going too low. A pop in crude oil prices and speculation about fiscal spending after the election may also be at play.

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