Wall Street slumped into the close last night as the perfect storm of poor earnings news and evidence of a slowing global economy took a toll on stocks. Futures have rebounded overnight with European buyers seemingly finding some value at current levels, but any respite could yet prove short lived. We’ve got US durable goods order data slated for release before the opening bell and anything that further highlights how trade tariffs are impacting US business will give the market another signal to sell.
Even with overnight gains, the DOW now sits negative on the year, with the upside from Donald Trump’s tax breaks having been reversed. Earnings season continues, with both Amazon and Alphabet headlining, set to report numbers after tonight’s close. Any signs of a slowdown amongst these two online giants would again have the potential to trigger further broad-based selling, whilst the narrative on the global economy from the ECB today – they give their latest rate verdict – will also be telling. Another sharp sell off such as the one seen yesterday would tip the Dow into correction territory – we’re still some considerable way from a bear market, but the enthusiasm for equities does seem to be running thin.
Ahead of the open we’re calling the DOW up 177 at 24760 and the S&P up 22 at 2678.
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Ongoing rate curve repricing and risk asset reaction perfectly illustrate how worryingly reliant investors have become on easy money policies