This week, the market went nowhere as it compared the good news that we may see a pause in interest rate increases to the bad news that the economy is slowing.

For the week:

Dow +0.2%
Nasdaq -0.4%
S&P 500 +0.1%
S&P Midcap 400 +0.3%
S&P Smallcap 600 +0.6%

July ended down:

Dow -0.4%
Nasdaq -4.5%
S&P 500 -0.2%
S&P Midcap 400 -3.6%
S&P Smallcap 600 -4.2%

Monday set the convictionless tone of the week. With August widely known as a seasonally bad month for the market, investors weren't champing at the bit to buy on the last day of July.

That mood, coupled with St. Louis Fed President William Poole's saying that he sees a 50% chance of another rate hike next week, put a damper on stocks. Then, too, there was little news to digest.

So, the Dow slipped 0.3% and the Nasdaq 0.1%.

Tuesday was different. The Commerce Dept. reported that the core-PCE deflator rose 0.2% in June, matching expectations. However, the year-over-year increase of 2.4% is well above the 2% top-end of the Fed's comfort zone. That left a question hanging over Wall Street: Will the Fed believe another rate hike is necessary on Aug. 8?

While stewing on that, the head-scratchers were served another morsel of doubt when the prices paid component of the ISM Index rose to 78.5%, up from 76.5% and the biggest number so far this year. Evidence of inflation, indeed.

Increasing inflation means more rate increases from the Fed, and that's no good for stocks, so they went down. The Dow lost 0.5% while the Nasdaq fell 1.4%.

Wednesday brought a small respite simply because it delivered no bad news. Ahead of a Fed meeting these days, all news is filtered through the chance of another hike analysis. Incoming data is the watch phrase as that's what the Fed says its policy depends upon. This has always been self-evident to me. What else would the Fed look at when assessing the health of the economy, cloud formations over Washington, D.C.?

Yet, because the Fed has referred to its decision-making procedure as being dependent on the incoming data, investors are watching that data more closely than usual. None of it came on Wednesday, so the relief sent the averages higher.

There was some good earnings news. Procter & Gamble (PG) reported a year-over-year jump of 36% in its latest quarterly earnings. Time Warner (TWX) reported a profit. Adobe Systems (ADBE) reaffirmed its Q3 guidance. Electronic Arts (ERTS) lost less than expected.

The lack of bad news and the small batch of good news put the Dow up 0.7% and the Nasdaq 0.8%.

I've been writing for some time now that August and September are times to buy what gets cheap. I've encouraged readers to keep a shopping list ready. I've done the same, and on Wednesday bought eBay (EBAY) at $23.

Thursday was mildly positive. It started badly when an unexpected rate hike from the Bank of England made clear that the interest rate issue isn't behind us yet.

Then, the ISM Services Index fell for the third month in a row, this time to 54.8 in July. We have to go all the way back to September to find a comparably slow rate of change. On top of that, the Commerce Dept. said that factory orders in June rose just 1.2%, less than expected.

These are hardly major economic measurements, but they were enough to offset England's bad news and give investors reason to believe the Fed might indeed skip another rate increase next week. When same-store sales came in rosier than projected and oil prices came down a notch, the market found a green light for the day and turned around early declines.

The Dow gained 0.4% and the Nasdaq gained 0.7%. eBay, I was happy to see, gained 5%.

Friday's pattern was a mirror image of Thursday's. Stocks rose in the morning when nonfarm payrolls came in at 113,000, less than expected. Also, the unemployment rate ticked up to 4.8% from June's 4.6%. That's the highest it's been in five months. Together, these data indicated that the labor market is slowing which means there should be less inflationary pressure going forward.

Less inflationary pressure means a pause in interest rates. At least, that's what the market thinks. Fed funds futures indicated a 44% chance of another hike on Aug. 8 prior to the jobs info. That chance dropped to 20% after the reports. Stocks rose.

Then, it occurred to people that all the supposed good news that will stay the Fed's hand is actually bad news for the economy. A slowing job market and declining factory orders, but with prices still on the rise, is not much to get excited about.

That idea left the Dow flat while the Nasdaq lost 0.4%.

Earnings season is winding down, and it has been surprisingly good. The projection for 12% earnings seemed optimistic, but they came in at 15%. This bodes well for an end-of-year rally in stocks.

Before we get to that, though, we have to get out of summer and the hurricane season. Next Tuesday brings the Fed's rate decision. Even if it pauses, the accompanying statement will give investors something to think about because it could leave open the chance for more increases later in the year.

Don’t throw away your shopping list. The sale season isn't over yet.

Jason Kelly’s column appears every Saturday. He also writes The Kelly Letter every week with specific buy and sell guidance. For more information, please visit