U.S. Index Activity Positive This Morning

U.S. exchanges

If you listen to analysts from the major sources of “morning run-downs,” we are looking at some complex math on U.S. exchanges.

Here’s how Bloomberg characterizes this morning’s reversal as SP500 and DJIA bump up after losing yesterday.

“U.S. stocks halted a two-day sell-off that took major indexes to multimonth lows, with groups battered by the trade tensions leading the rebound. Treasury yields steadied near their lowest since 2017,” analysts write. “The S&P 500 pushed back toward the 2,800 level after closing below it for the first time since March. Chipmakers and industrial shares paced the gain. A fresh batch of economic data suggested the expansion was on firm footing before the Trump administration escalated the trade war earlier in May.” (bold added)

These analysts note that equities have plunged 5% in the month – and the consensus is that this happened mostly on US/China trade fears.

Now, here’s Fred Imbert at CNBC:

“Stocks rose on Thursday as the rapid decline in bond yields stabilized, easing concerns about a recession.”

So bond yields helped – and others cite numbers showing U.S. growth above 3% in the first quarter of this year according to revised GDP.

But Imbert then does give credence to the continuing effects of an emerging trade conflict between the world’s two most powerful economies.

“The protracted trade dispute between China and the U.S. still weighed on markets,” Imbert writes, also chronicling concrete steps taken in the trade war within the last 24 hours. “A senior Chinese diplomat ramped up the rhetoric overnight. Also, China has halted soy purchases from the U.S., according to Bloomberg News.”

With actual ratcheting up of trade conflict, as mentioned, it’s likely that these new gains will be quickly erased. In fact, as of around 10:30 EST, there’s no real indication that either SP500 or DJIA will rise above five-day highs this morning.

A reasonable conjecture at this point is that there really is no reprieve from the US/China trade issue weighing down markets, absent real, verifiable gains in diplomacy and resolution. Investors don’t see that coming from either side of the exchange, so we can expect more losses based on bearish investor sentiment in the near future.