Stocks finished significantly lower yesterday following a weak tone in global equities, despite some positive action late in day following the FOMC minutes. China has been the primary driver of the market action lately, and on Wednesday the volatility from the region once again dictated US equities at the open. While July CPI came in a bit softer than expected, numbers were mostly in line for expectations and did not do a whole lot to mend the damage at the open. Concerns over volatility in Chinese equities and yuan devaluation remained in primary focus on Wednesday.
Stocks got a bit of a boost later in the day following some dovish takeaways from the July FOMC minutes. The release indicated that conditions were not yet ready for liftoff, but were approaching. This news gave the selling some pause, and an intraday rally sent equities higher briefly. The gains since the release, however, were pared completely by the closing bell.
This morning, futures are down across the board following Asian and European markets lower. Same story, different day. Spillover effects from China's growth slowdown and yuan devaluation are still to blame for the global risk-off trade that has been a daily theme recently. Shanghai finished down 3.4%, though European stocks were not hit quite as hard. Concerns over the selloff in oil are also in focus this morning.
We'll just have to wait and see if today will be another ride lower, or if the bulls can muster any footing as we approach the low end of the trading range on the S&P 500. Important support levels in play today are the short-term support at 2070, and perhaps even the intermediate-term support at 2050. There is a slew of economic data coming out this morning, the most important being the Philly Fed at 10am Eastern. Stay tuned…
Publishing Note: I will be traveling in Europe for the next couple weeks as my wife and I celebrate our 35th wedding anniversary. As you might suspect, morning reports are likely to be sparse between now and Labor Day.
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David Moenning is Chief Investment Officer at Heritage Capital Management, a Chicago-based registered investment advisory firm. Mr. Moenning began his investment career in 1980 and formed Heritage Capital in 1989. Dave’s firm focuses on “active management” and focuses on managing market risk on a daily basis. Dave is also the proprietor of StateoftheMarkets.com, which provides free and subscription-based portfolio services. Mr. Moenning is the 2013-14 President of NAAIM (National Association of Active Investment Managers) an organization dedicated to active management strategies. Follow Dave on Twitter at @StateDave.