And, as of 12:30 p.m. New York time, negative trade sentiment was winning.
The day started off with positive earnings reports–earnings beats and positive guidance–from IBM (IBM), Procter & Gamble (PG), and United Technologies (UTX). In premarket trading the three were up 7%, 4.3%, and 4.9%, respectively. (All three stocks are members of the Dow Jones Industrials.) That led to a positive move in the S&P 500 futures market–up 12 points before the market open. And to a strong possibility that the market would signal that yesterday and Friday’s retreats were just a blip and that the downward move was over.
But the market couldn’t hold those gains. From an open at 2641 the S&P 500 index fell to 1613 as of 12:15 p.m.
Selling into strength like this is often an indicator of further declines ahead.
The impetus for the drop came from reports that President Donald Trump doesn’t plan to soften his push for structural changes to the Chinese economy as the price for a tariff deal. That came on the heels of yesterday’s statements from Larry Kudlow, director of the White House National Economic Council stressing the need for the United States to be able to track and enforce any promises that China made on trade. The Chinese government is a bit sensitive about the idea of allowing another country access to its economy at all–let alone to the degree that Kudlow seemed to suggest yesterday.
The White House comments were more than enough to keep worries about a global economic slowdown as a result of the U.S.-China trade war alive and well for another day. (And as a bonus, the chief White House economist said today that if the partial government shutdown continued until March 1–which just happens to be the deadline for reaching a tariff deal with China–it could send U.S. GDP growth for the first quarter down to 0%.)
As of 12:30 p.m. New York time the Standard & Poor’s 500 was down 0.48% or 12.74 points to 2620, just slightly below the recent 2626 pivot point, The Dow Jones Industrial Average was off 0.08%. The NASDAQ Composite was lower by 0.67% and the small cap Russell 2000 index had lost 0.78%.
The CBOE S&P 500 Volatility Index (VIX), often called the “fear Index,” had moved up another 5.72% to 21.99.
The yield on the 10-year Treasury was up three basis points to 2.77%. Gold fell 0.4% to $1279 an ounce. U.S. crude benchmark West Texas Intermediate was down 1.41% to $52.26 a barrel and international benchmark Brent was lower by 1.32% to $60.69 a barrel.
