Stock Indexes

S&P 500; US Indexes Fundamental Daily Forecast – Catalyst Today is China Tariff Announcement

The major U.S. stock indexes are expected to open lower based on the trade in the futures market. With the Fed events history, investors are now focusing their attention on the tariff announcement from the White House.

At 1200 GMT, June E-mini S&P 500 Index futures are trading 2697.75, down 20.50 or -0.75%. The June E-mini Dow Jones Industrial Average is at 24526, down 201 or -0.81% and the June E-mini NASDAQ-100 Index is trading 6805.00, down 79.00 or -1.15%.

E-mini S&P 500 Index
Daily June E-mini S&P 500 Index

Today’s weakness comes on the heels of a 25 basis point rate hike by the Fed on Wednesday and upgraded economic outlook. The Fed concluded that economic activity and job gains had been strong enough in recent months to warrant the rate hike.

The Fed also said that it could raise rates as many as two more times in 2018 which was in line with previous forecasts. It also increased its rate-hike forecast for 2019. Following the announcement, Treasury yields rose with the benchmark 10-year yield briefly topping 2.9 percent, before paring some gains.

E-mini Dow Jones Industrial Average
Daily June E-mini Dow Jones Industrial Average

Forecast

The stock market is likely to remain under pressure early in the trading session as investors prepare for the announcement of tariffs designed to punish China for intellectual property theft. Traders have been anticipating this event for a couple of weeks so it has probably been priced into the stock market.

E-mini NASDAQ-100 Index
Daily June E-mini NASDAQ-100 Index

The “unknown”, however, is driving the price action now. No one is certain how China will respond to the sanctions and this is making investors nervous today.

Given the elevated levels of volatility and the uncertainty over a potential trade war with China, our bias will be to the downside today.

The markets, especially the NASDAQ Composite and NASDAQ-100 Index, also remain vulnerable to weakness in the social media sector led by shares of Facebook.

Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.