U.S. markets were weak throughout Thursday’s session as the trade war deepened between the U.S. and China.
China has accused the U.S. of trade abuses, while the U.S. continues to accuse China of stealing technology. India has now joined Europe in imposing retaliatory tariffs on U.S. goods as the trade war reach extends.
The Dow extended its losing streak to 8-straight sessions after dropping 0.8% while trading to a low of 24,406. Backup support at 24,450-24,400 is now in play on the close back below the 50-day moving average.
The S&P 500 declined 0.6% after testing a low of 2,744. Major support at 2,750 was breached and was a slightly bearish development.
The Nasdaq made a run past the 7,800 level before fading 0.9% on the late day pullback to 7,699.
The 7,700 level has been holding for the past 6 sessions and 7 of the last 8 with a close below this level being a slightly bearish signal.
The Russell 2000 also saw positive territory on the open while missing a fresh all-time high north of 1,708 by a tenth-point. The backtest to 1,685 and close back below the 1,700 level was a slight concern.
Real Estate added 0.6% to lead sector strength while Utilities and Consumer Staples were up 0.3% and 0.2%, respectively.
Energy sank 1.9% and was the main sector laggard. Industrials and Materials were lower by 1.3% and 1.1%.
Global Economy – European markets were lower across the board after the Bank of England issued its monetary policy decision.
Germany’s DAX 30 sank 1.4% and France’s CAC 40 tanked 1.1%. The Stoxx 600 Europe and UK’s FTSE 100 fell 0.9% while the Belgium20 was lower by 0.6%.
The Bank of England announced that it will maintain its Bank Rate at 0.5% and make no changes to its current bond buying program.
UK May public sector net borrowing rose 3.4 billion pounds, weaker than expectations of 4.9 billion pounds.
Asian markets were mixed over continued tariff tantrums and ahead of Friday’s OPEC meeting.
Australia’s S&P/ASX 200 jumped 1% and Japan’s Nikkei was higher by 0.6%.
China’s Shanghai and Hong Kong’s Hang Seng tumbled 1.4% while South Korea’s Kospi slumped 1.1%.
Initial Jobless Claims fell 3,000 to 218,000 in the week ending June 16th, and below estimates of 220,000.
The Philadelphia Fed Business Outlook Survey dropped 14.5 points to 19.9 in June, well below expectations for a print of 28.
The FHFA House Price Index rose 0.1% to 262.5 in April. Forecasts were looking for a gain of 0.5% to 263.1.
Leading Indicators for May rose 0.2% to 109.5, below expectations for a rise of 0.3%.
Market Sentiment – Minneapolis Fed Kashkari sees no signs of overheating in the economy, in remarks made at the African Development Center.
The iShares 20+ Year Treasury Bond ETF (TLT) made a run to $120.76 with resistance at $120.50-$121 getting split. Renewed support is at $120-$119.50.
Market Analysis – The Spider Small-Cap 600 ETF (SLY) fell for the first time in five sessions after tapping a low of $73.84. Current support is at $73.50-$73 with a move below the latter signaling a possible short-term top.
SLY traded to an all-time high of $74.88 midweek with resistance at $74.50-$75 still in play.
We mentioned continued closes above the latter could lead to a run towards $76.50-$77.50 over the near-term.
RSI is in a downtrend with support at 65-60. A move below the latter would be a slightly bearish development. Current resistance is at 70-75.
The iShares PHLX Semiconductor ETF (SOXX) closed lower the 4th-time in 5 sessions after kissing an intraday low of $187.52.
Near-term support is at $187.50-$187 with a close below the latter signaling additional weakness.
February and March resistance remains at $189.50-$190 with additional hurdles at $192-$192.50.
RSI has been in a downtrend with support at 45-40 and late April lows. Resistance is at 50-55.
All the best,