Wednesday Morning's Market Outlook

Wednesday Morning's Market Outlook

Three news items to watch include Caterpillar, Brexit, and the China trade deal.

Wednesday Morning's Market Outlook
Wednesday Morning's Market Outlook LinkedIn Sales Navigator via StockSnap

Earlier this week, U.S. stock markets saw a significant drop to open the week, but then stabilized going into Monday afternoon. Yesterday was a relatively quiet day with limited ranges and mostly positive economic data; however, traders are still watching to see how Trump's negotiations of the trade deal with China will play out.

Regarding this potential deal with China, Nomura Bank made a statement yesterday saying that the “market appears to have fully incorporated a potential Sino-US trade agreement and subsequent recovery of the US and Chinese business climate.”

Morgan Stanley released a note yesterday that suggested the U.S. dollar has room to fall and that it foresees a bearish climate for the currency through 2019. The bank also cut its Fed view down to a single rate hike expectation for this year in December, followed by the implementation of two hikes in 2020.

Negotiations in the European Union regarding Great Britain's “Brexit” remain ongoing and are not expected to be resolved for several more days.

In Wednesday’s session, 7 out of 12 Asian stock markets closed higher including the Shanghai which was up by 1.57%. Meanwhile, this morning In Europe, 9 out of 13 stock markets are currently trading lower while the U.S. stock indices futures are down modestly in the pre-open.

In other news yesterday, Caterpillar’s CEO came out with a statement saying that North American sales are strong. CAT is often seen as an economic leading indicator, and with the markets concerned about a potential economic slowdown, these were some bullish words.

Today’s agenda includes 79 corporate earnings reports, the most notable being Dollar Tree and Abercrombie and Fitch. On the economic end, the 7:00 and 8:15 numbers will be the biggest ones of the day, coming in before the New York financial open.

On the S&P 500 futures, we are watching the 2782 - 2785 area as the short-term pivot. Above this price, we would look for the market to climb back up to 2800. However, a break below that pivot range would then lead us to target Monday’s low of 2767.50.

 

Today’s Economic Calendar:

  • MBA Mortgage Applications 7:00 AM ET
  • ADP Employment Report 8:15 AM ET
  • International Trade 8:30 AM ET
  • EIA Petroleum Status Report 10:30 AM ET
  • Loretta Mester Speaks 12:00 PM ET
  • John Williams Speaks 12:10 PM ET
  • Beige Book 2:00 PM ET

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