Wall Street closes in the red following a series of bearish inputs

  • The Dow Jones Industrial Average DJIA, -1.41% dropped 354.84 points, or 1.4%, to 24,815.04. 
  • The S&P 500 index SPX, -1.32% fell 36.80 points, or 1.3%, to 2,752.06.
  • The Nasdaq Composite COMP, -1.51%  dropped 114.57 points, or 1.5%, to 7,453.15.

Wall Street was bleeding and closing lower on Friday as global markets turn soar on global growth fears. Despite moving forward with the U.S.-Mexico-Canada Agreement by processing a bill towards Congress to implement the agreement, the successor to NAFTA, Trump came out with a shock announcement in early Asia catching sleepy Friday traders off guard.

In a tweet, Trump was saying that the U.S. will impose a 5% tariff on all goods from Mexico unless that country stops the flow of illegal immigrants into the country. Then, Trump followed up and said,  “Tariffs will permanently remain at the 25% level unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory." This news sent risk into a tailspin which sped up throughout European and US markets, turning the trade war screw in even tighter just as Sino/US trade wars were escalating.  

Hu Xijin, The Chief in Editor of the Global Times, which has become to the go-to place on Twitter for Chinese retaliation sentiment to the trade spat, proclaimed that China will indeed strike back and said, “Based on what I know, China will take major retaliative measures against the U.S. placing Huawei and other Chinese companies on Entity List. This move indicates Beijing won’t wait passively and more countermeasures will follow."

In addition to the trade disputes, Chinese data from overnight showed that the economy has fallen back into contraction. China’s manufacturing purchasing manager index (PMI) dropped to 49.4 versus 49.9 forecasts and below the 50.1 prior while non-manufacturing PMI fell below the 53.5 market consensus to match 54.3 prior.

As a result of all of the above, The Dow Jones Industrial Average DJIA, -1.41% dropped 354.84 points, or 1.4%, to 24,815.04, The S&P 500 index SPX, -1.32% fell 36.80 points, or 1.3%, to 2,752.06 and the Nasdaq Composite COMP, -1.51%  dropped 114.57 points, or 1.5%, to 7,453.15. 

DJIA levels

As for monthly results, the Dow was falling 6.7% and the index stays technical negative and capped below the 23.6% Fibo around 25200. The bears can now target a run towards the 24500s and then 50% of the upside run made at the end of Dec at 24150. On the upside, bulls need to get back above the 38.20% Fibo in the 25300s, a triple bottom level on the 4HR outlook.  25430 is roughly where the 200 D EMA is located.


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