Intraday Market Update
There is a global sell off brewing across most asset classes after the FOMC downgraded their economic view yesterday and decided to maintain its bloated balance sheet. Throw in more uninspiring economic data from around the globe and you have the recipe for a sharp decline in equities and commodities. The sell off in the US is broad and deep as most core sectors have lost -2% or more. Semiconductors, transportation, oil services and coal are the worst performers losing nearly -4%. All of the major indexes are have lost more than -2% and are trading near their lows of the day. The Russell 2000 has lost -3.4%. Front month crude oil has shed -2% while copper is off by -1.6% in the face a huge +1.80% rally in the US dollar. Overseas, markets were also weak especially in Europe where all markets lost more than -2%.
US futures took a hit in the overnight session after disappointing data out of Japan and China. Japan machine orders rose +1.6% m/m in June, which was a big rebound from the -9.1% drop seen in May, but it was well below the +5.4% growth that estimates called for. Meanwhile, more troubling data from China did little to help boost confidence in the economic recovery. Chinese industrial production slowed and was in-line with estimates, but reports on retail sales growth, new loans, fixed asset investments, and money supply, all came in worse than anticipated.
Selling was exacerbated when a slew of economic reports out of the UK indicated that nationwide consumer confidence deteriorated to 56 compared to estimates calling for 61, which marks a 14 month low. UK jobless claims were also worse than expected. And in its quarterly inflation assessment the Bank of England said the economic outlook is weaker than its last report from May, while also providing an inflation outlook that was below its 2% target rate.
Here in the US the trade deficit data out this morning is adding to worries as it widened by almost 20% m/m (to -$49.9 billion from -$42.0 billion) to approach the -$50 billion level. This is the largest gap since October 2008. The shortfall was much larger than estimates calling for a -$42.5 billion gap. Exports fell -1.3% which follows a +2.5% gain in May, while imports rose +3% percent in June after rising +2.8% in May. According to some measures, the data implies that Q2 US GDP would have to be revised down to 1.5% from the initial 2.4% reading.
There is no major news to report in equities.
Core Sector List:
NOTE: I have expanded my list of core sectors from 16 to 20. The additions are Telecommunications, Real Estate, Natural Gas, and Coal.
Overall reading: 0 sectors advancing, 20 sectors declining
Strongest Sectors: NONE
Weakest Sectors: Coal, Semiconductors, Transportation, Oil Services
S&P 500 - Daily and Hourly Charts:
Dow Jones - Daily and Hourly Charts:
NASDAQ - Daily and Hourly Charts:
Russell 2000 - Daily and Hourly Charts: