Wall Street closes in red on risk-aversion and dismal earnings
|- CBOE Volatility Index rises more than 6% on Thursday.
- Trump criticizes the Fed's monetary policy.
- European Commision says the EU will retaliate if the U.S. imposes tariffs on European car imports.
Major equity indexes in the United States started the day on a weak note as investors' focus, once again, turned to trade conflict headlines. The CBOE Volatility Index, Wall Street's fear gauge, rose more than 6% to suggest a risk-off environment.
Speaking in Brussels earlier today, Cecilia Malmstrom, the EU’s trade commissioner, said that there would be a 'disastrous' impact on the economy if the Trump administration were to impose tariffs on European car imports and added that the EU would retaliate. "When you see concerns over trade arise, you see small caps and the dollar typically rise, and that shows they are seen as safe haven assets," Shawn Cruz, manager of the trader strategy at TD Ameritrade in Chicago, Illinois, told Reuters.
The risk-sensitive S&P 500 Information Technology Index (SPLRCT) closed the day 0.33% lower on Thursday. However, after the closing bell, Microsoft reported higher-than-expected Q2 revenue and EPS, which could help the sector rebound on Friday.
On the other hand, in an interview with CNBC, President Donald Trump said that he wasn't happy with the Fed's decision to raise rates and added that he was concerned about the potential negative impact of the Fed's monetary policy decisions on the economic expansion. The S&P Financials Index (SPSY) suffered the most from Trump's remarks and lost 1.44% on the day to weigh on financial-heavy Dow Jones Industrial Average, which erased 134.52 points to 25,064.77.
The S&P 500 fell 11.48 points, or 0.41%, to 2,804.14 and the Nasdaq Composite lost 28.27 points, or 0.36%, to 7,826.18.
DJIA technical outlook (via FXStreet Chief Analyst Valeria Bednarik)
"The Dow now barely holds in the green weekly basis, having bottomed for the day near last Friday's close. The decline, considering that the index advanced for the previous five sessions, seems corrective, given that in the daily chart, it holds well above its moving averages, with the shortest advancing, while technical indicators hold near overbought levels, with only the RSI retreating, currently at 60."
"Shorter term, and according to the 4 hours chart, however, the risk of a downward extension has increased, as the index settled below a now horizontal 20 SMA, still developing well above it's 100 and 200 SMA, as technical indicators extended their declines, now challenging their midlines. "
According to the analyst, supports are located at 25,045, 24,990, and 24,933, while resistances align at 25,061, 25,103, and 25,157.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.