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Markets I Technicals Stoke Volatility as Key Levels Approach
Hi. Amrith Ramkumar here guiding you through the latest in markets after stocks rebounded yesterday.
U.S. futures are down, with Asian markets higher as investors weigh
earnings from internet giants Tencent and Alibaba. We're awaiting
numbers from Macy's shortly, and Cisco is on deck after the market
We'll also get data on April retail sales and industrial production
that could swing projections for second-quarter economic growth.
Plus, I look at a series of stock-market momentum indicators and the signals they are sending after recent swings.
Markets in a Minute
Global stocks wavered Wednesday, following a strong close in the U.S.
overnight after President Trump suggested a U.S.-China trade deal could
still be in the cards.
Indexes are trading near trend lines that could impact sentiment.
Recent stock-market gyrations
have carried major indexes near closely watched technical levels,
exacerbating swings in both directions as investors weigh the latest
updates on trade policy.
Technical levels are recent averages and other notable milestones watched by investors to gauge the market’s next direction.
Indexes falling below critical levels can prompt selling by
market technicians, who use trend lines to trace an asset’s recent
performance, while indexes staying above such levels or eclipsing them
after dips can spur further buying.
After stocks breached
key averages, helping power their rally in the first four months of the
year, some analysts are wary that a reversal will lead to punishing
drops reminiscent of the losses that nearly ended the S&P 500’s
10-year bull-market run last December.
In an example of the mixed picture facing analysts following a sudden
uptick in volatility, the S&P 500 closed below its 50-day moving
average on Monday for the first time since mid-January.
The broad equity gauge during the day had dropped back near 2800—a
psychological level that has limited its drops in recent sessions—before
rebounding in afternoon trading.
The S&P also stayed above its longer-term 200-day moving
average, a positive development that helped set the stage for Tuesday’s
recovery, analysts said. And with Tuesday’s rally, the Dow
industrials bounced back above their own 200-day moving average after
dipping below it a day earlier.
The swings have coincided with changing bets on the U.S. and China reaching a trade agreement.
After stocks tumbled Monday as Beijing released plans to increase
levies on $60 billion in U.S. imports, they rebounded Tuesday following comments from President Trump that the two sides will reach a deal “when the time is right.”
Some investors are bracing for more swings ahead, predicting
other protectionist policies that could continue shifting projections
for economic and profit growth ahead of the 2020 presidential election.
“It is possible we will still see trade volatility and trade tensions
all the way up until the election because it is a strong political
position,” said David Kelly, chief global strategist at J.P. Morgan
In another sign market momentum has held up so far during the recent
bout of turbulence, 58% of S&P 500 stocks are still trading above
their 200-day moving average, according to Dow Jones Market Data. That’s
down from an April peak of 73% but still up from 19% at the end of last
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About 34% of investors surveyed by Bank of America Merrill Lynch have
taken out protection against a sharp fall in stocks in the next three
months, the highest such total in the history of the bank's monthly fund
Natural-gas prices rose
for the third consecutive session Tuesday, climbing to a one-month high
as cold weather boosted heating demand in much of the country. Prices
are up 8.3% from their April multiyear lows but still down 9.6% in
On this day in 1995, the Foundation for New Era Philanthropy—which had
claimed to match the money it raised for charities from such wealthy
donors as investor Sir John Templeton, former U.S. Treasury Secretary
William E. Simon and ex-Goldman Sachs co-chairman John C.
Whitehead—filed for bankruptcy protection as founder John G. Bennett confessed the whole thing was a Ponzi scheme.
U.S. retail sales for April are expected to rise 0.2% from the prior month. The figures are slated for 8:30 a.m. ET.
The New York Fed Empire State Survey for May, also out at 8:30 a.m., is expected to fall to 8.0 from 10.1 a month earlier.
U.S. industrial production for April is expected to be flat from the prior month. The data are scheduled for 9:15 a.m.
U.S. business inventories for March are out at 10 a.m.
The National Association of Home Builders index for March, also slated for 10 a.m., is expected to tick up to 64 from 63 a month earlier.
Treasury Secretary Steven Mnuchin and IRS Commissioner Charles Rettig appear before a Senate Appropriations subcommittee at 10 a.m.
U.S. crude-oil inventories will be published at 10:30
a.m. Stockpiles are expected to have fallen 1.4 million barrels last
week, per the average target of 10 analysts and traders surveyed by the
Fed Vice Chairman Randal Quarles testifies on supervision and regulation before the Senate Banking Committee at 9:30 a.m.and the Richmond’s Fed's Thomas Barkin speaks to the New York Association for Business Economics at 12:00 p.m.
Traders work on the New York Stock Exchange floor during Uber's IPO. PHOTO: MICHAEL NAGLE/BLOOMBERG NEWS
Uber has poisoned an IPO market that was already sick. Uber’s flop makes it harder for the next big Silicon Valley unicorn trying to shift its losses on to public markets, James Mackintosh writes, just as Snap’s dire debut did two years ago.
Trian may wage an activist campaign at Legg Mason. Trian Fund Management recently has held discussions with Legg Mason management about the need to cut costs and improve profit margins, though the two sides may still negotiate a settlement that sidesteps a proxy fight.
Bankers are finding new reasons to keep lending to SoftBank.
Bankers also say they are eager to lend because changes in SoftBank’s
corporate structure mean banks and credit-rating firms can view it as an investment holding company rather than as a mobile-phone operator.
Payday lenders are drumming up customer support to ease regulations. Payday lenders have been mobilizing their customers to push the federal government to ease Obama-era regulations of the industry, according to research by a consumer advocacy group that favors the rules.
Citigroup is joining India’s digital Paytm for its card launch. Citigroup is partnering with Indian mobile-payments app Paytm to issue the service’s first physical credit card.
What We've Heard on the Street
“A coming cost crunch for ride-hailing companies may be one reason investors have been so quick to apply the brakes.”
McDonald’s: The fast-food giant said it would let franchisees decide
which breakfast items to serve all day, part of an effort to simplify
operations as wait times have grown and traffic has stalled.
Agilent Technologies: The company said quarterly profit fell as disappointing revenue numbers hurt its bottom line.
CVS Health: Shares of the health-care company fell 1.6% Tuesday, their eighth drop in nine sessions, with a recent lawsuit about generic drug pricing and worries about shifting health-care policies moving forward pressuring the sector recently.
The maker of action cameras rose 11% Tuesday, its largest one-day
advance since Aug. 3 and eighth advance in the last nine sessions.
Tilray: The cannabis company said quarterly sales nearly tripled from a year earlier, topping targets.