Equity markets pulled back on Wednesday, extending the stock decline for another day. The S&P 500 pulled back more than 0.5% at the session's low, setting a new 1-month low and new lows are on the way. The pullback appears to be gaining momentum and was not aided by Wednesday's data or earnings reports. On the earnings front, reports from retailers are mixed and point to weakness in discretionary names in the 2nd half. Winners include TJX Companies, which grew and raised guidance, while Target is losing share to its competitors.

Housing starts and permits data was mixed and tepid on the economic front, with starts coming in as expected and permits below consensus. Permits, the leading indicators, are down compared to last year and suggest the recent pick-up in the housing market is over. Next week, existing and new home sales data may do the same. If so, the market sell-off will continue.