U.S. markets showed strength throughout much of the session before late days news on trade talks derailed the rally.
The White House is reportedly preparing to announce tariffs by early December on all remaining Chinese imports if talks next month between presidents Donald Trump and Xi Jinping fail to make progress.
The new tariff list would apply to the imports from China that aren't already covered by previous rounds of tariffs and sent the major indexes reeling. Fresh monthly lows were set with volatility remaining slightly elevated.
The Nasdaq tumbled 1.6% after testing a low of 6,922.
Lower May support at 7,100-7,000 was breached but held into the closing bell.
The Dow declined 1% despite clearing the 25,000 level shortly after the open.
The 918-point plummet to 24,122 breached support from late June at 24,500-24,250 with the latter level holding into the close.
The S&P 500 gave back 0.7% after trading dow to 2,603.
Late April and lower support at 2,625-2,600 held with risk to 2,550 and February lows on a move below the latter.
The Russell 2000 was lower by 0.4% following the late session pullback to 1,461. February and upper support at 1,460-1,450 held with risk to 1,425 on a close below the latter.
Real Estate and Utilities showed the most sector strength after rising 1.7% and 1.4%. Consumer Staples and Financials gained 1.2% and 0.9%, respectively.
Energy led sector weakness after sinking 1.9% while Technology and Industrials were off 1.7%.
Global Economy - European markets showed solid gains on news that China will announce a 50% cut in car purchase taxes while German Chancellor Angela Merkel announced plans to step down as party chairman.
UK's FTSE 100 soared 1.3% and Germany's DAX 30 rallied 1.2%. The Belgium20 rose 1% and the Stoxx 600 Europe was higher by 0.9%. France's CAC 40 added 0.4%.
UK September net consumer credit rose 0.8 billion pounds, below estimates of 1.2 billion pounds.
UK September mortgage approvals rose 65,300, topping expectations of 64,700.
Asian markets settled mixed on disappointing economic news out of China.
China's Shanghai tanked 2.2% while South Korea's Kospi sank 1.5%. Japan's Nikkei slipped 0.2%. Meanwhile, Australia's S&P/ASX 200 jumped 1.1% and Hong Kong's Hang Seng was up 0.4%.
Japan September retail sales fell 0.2%, matching expectations.
China September industrial profits rose 4.1% year-over-year, the smallest increase in 6 months.
Personal Income and Outlays increased 0.2% in September, with spending 0.4% higher, matching expectations. Compensation edged up 0.2% versus the prior 0.4% gain.
Wages and salaries were 0.2% higher following August's 0.5% jump. Disposable income was up 0.2% from 0.4% previously. The savings rate dipped to 6.2% from 6.4%.
The chain price index was up 0.1% in September, the same as August, with the core rate rising 0.2% from unchanged. On a 12-month basis the headline price index cooled to 2% year-over-year versus 2.2%.
The core rate was steady at 2% year-over-year.
The Dallas Fed Manufacturing Survey for October checked in at 29.4, above forecasts of 29. The employment component rose to 23.9 after tumbling 11.2 ticks to 17.7 previously.
Hours worked were basically halved to 6.5 from 12.7, with wages and benefits dipping to 32.9 from 33. New orders improved to 18.9 from 14.7. Prices paid for raw materials climbed to 54.4 from 44.4, with prices received for finished goods at 17.5 from 13.6.
The 6-month general business activity index fell to 35.6 from 38. The future employment index dropped to 32.8 from 39.4, with wages at 51.4 from 57.4.
The future new order gauge rose to 46.1 versus 44.9.
The 6-month prices paid index dipped to 42.1 versus 43, while prices received at 27.1 from 28.0. Capital expenditures were 28 from 37.8.
Atlanta Fed's Q4 GDPNow estimate came in at 2.6% compared to the Blue Chip consensus of 2.7%.
Market Sentiment - The iShares 20+ Year Treasury Bond ETF (TLT) remains mired in a 3-week trading range between $113.50-$115 after tested a low of $114.26.
Upper support at $114.25-$113.75 held with a close below $113.50 signaling additional weakness.
Resistance remains at $115-$115.25 with a close above $115.50 being a more bullish development.
Market Analysis - The Spider Small-Cap 600 ETF (SLY) was down for the 8th time in 9 session despite the intraday push to $67.67. Fresh resistance at $67.50-$68 held.
Continued closes above the latter would be a slightly bullish signal as this level served as prior support from earlier this month.
Current support is at $66-$65.50 following the late day fade to $65.40. A close below $65 would likely signal another round of selling pressure.
RSI is flatlining with resistance at 30-35.
A move above 40 and the September peak would signal additional strength. Support is at 25-20 on continued weakness.
The Materials Select Sector (XLB) showed some intraday strength after making a run to $51.88. Fresh resistance is at $51.75-$52 held with additional hurdles at $52.50-$53.
Continued closes above the latter would signal a possible short-term bottom although the 50-day and 200-day moving averages are in downtrends.
Shaky support at $50.25-$50 held on the backtest to $50.22. A close below $50 would be a continuing bearish signal.
RSI remains at oversold levels with support at 20. A close below this level would signal additional weakness towards 15 and the monthly low. Resistance is at 25-30.
All the best,
Roger Scott.