Wall Street ends with benchmarks in the red ahead of Fed on trade war pessimism

Ahead of the Fed, all three major benchmarks finished off their lowest levels of the session, however, U.S. stocks ended slightly lower with Trump sending ripples of pessimism throughout the markets with respect to his comments over China and the trade talks between China and the US that got underway in Shanghai.

 President Trump lashed out at China, taking credit for weakening China’s economy and downplaying the likelihood of a deal before the 2020 election. In his Twitter posts and remarks to the press, he said, “I think the biggest problem to a trade deal is China would love to wait and just hope,” the Trump said. “They hope it’s not going to happen, I hope, but they would just love if I got defeated so they could deal with somebody like Elizabeth Warren or Sleepy Joe Biden or any of these people, because then they’d be allowed and able to continue to rip off our country like they’ve been doing for the last 30 years.”

At the same time, investors digested mixed corporate earnings reports. Following a higher close on Monday, the Dow Jones Industrial Average, DJIA, was unable to keep up the pace in the face of a poor start in sentiment for the trade talks and ended down 23.33 points, or 0.1%, at 27,198.02. The S&P 500 index fell 7.79 points, or 0.3%, to 3,013.18 while the Nasdaq Composite Index retreated 19.71 points to 8,273.61, for a light drop of 0.2%. 

US data

"US monthly PCE inflation data for June were in line with expectations, with headline rising 0.1% m/m (1.4% y/y) and core up 0.2% m/m (1.6% y/y). The 3-month annualised rate of core PCE is 2.4%, up from 0.6% in Q1, signalling that the period of low inflation at the start of the year has passed. Personal spending and income also rose in line with expectation," analysts at ANZ bank explained. 

DJIA levels

The DJIA index is supported at the 20-DMA as bulls look to the July highs still. An extension of the YTD range of 1.2720% opens 29000. However, to the downside, 26905 remains on the radar below the 20-day moving average at 27175. Below there, the 23.6% retracement of the 3rd June low to 12th July recently printed high falls in at 26706 which meets April 23rd and 1st May double-top highs.