It’s not like U.S. stocks didn’t have enough to worry about today. For the day the Standard & Poor’s 500 Stock Index closed at 2136.73, off by 1.24%. That was enough to push the S&P 500 below the 50-day moving average. The index has been flirting with that support level since early September. Maybe in this context the warnings issued today by Wall Street technical analysts feel like piling on–or maybe they are exactly what they seem, that is warnings
The financial markets are gradually convincing themselves that the Federal Reserve is certain to raise interest rates at its December 14 meeting. That, along with the continued retreat in the pound on remarks from U.K. Prime Minister Theresa May signaling a hard Brexit, sent the U.S. dollar to its biggest gain in two weeks. The Bloomberg Dollar Spot Index climbed by 0.6% this morning.
In the second quarter the U.S. economy grew by an annualized 1.2% instead of the 2.6% forecast by economists at the end of last week. This follows on 0.8% growth in the first quarter.
“It now seems plausible that uncertainty could remain elevated for some time,” Mark Carney, head of the Bank of England said today in his second televised speech since the United Kingdom voted to leave the European Union. “The economic outlook has deteriorated and some monetary policy easing will likely be needed over the summer”
Any post-Brexit crisis will will be a slow motion crisis driven by a gradual slowdown in economic growth in the United Kingdom, the European Union, Japan, China and the United States that results in a dimming of prospects for corporate earnings growth. The crisis will be interrupted periodically, as it has been in the last two days, by the hope that this time central banks will be able to intervene and get this or that economy growing again
The U.S. dollar is down for the third straight day and that has given oil prices a chance to recover after six straight declines. The dollar, as measured against the basket of currencies in the Bloomberg Dollar Spot Index, was down 0.42% today, as of 1:30 p.m. New York time Oil, on the other hand, has rallied today with the U.S. benchmark West Texas Intermediate up 2.75% to $47.48 a barrel
What had been up earlier this week was down today. U.S. stocks retreated with the Standard & Poor’s 500 stock index down 0.90% to move back below 2100 again. Emerging market stocks fell too with the iShares MSCI Emerging Markets ETF dropping 2.53%. Oil tumbled with U.S. benchmark West Texas Intermediate crude down 3.14% to $48.97 a barrel, below the closely watched $50 a barrel marker
There wasn’t much in the economic data today to make the financial markets reconsider their belief in the return of Goldilocks. Global growth numbers supported the view that key world economies will turn in decent performances. But none were so strong as to suggest putting higher interest rates from the Federal Reserve back on the schedule.
