Stock Market Drifts in Consolidation Mode


The US stock market has that consolidation feel in here, not surprising given the Bull run it had in June and knowing that some notable trading catalysts are lurking just under the surface now.

The S&P 500 and the DJIA drifted lower Tuesday, as investors worried over warnings of a hit to earnings from the US-China trade dispute and reined in hopes of a 50 bpts interest rate cut late this month.

Adding to the downbeat mood, RBC Capital Markets downgraded 3M Co (NYSE:MMM) to “sector perform”, citing macro pressures from China, auto and electronics sectors. The industrial conglomerate’s shares fell 2.6% and pulled down the S&P industrial sector .SPLRCI 0.56%.

The warnings come as earnings season kicks off in earnest next week. Profits at S&P 500 companies are set to dip 0.2% from a year earlier, according to Refinitiv IBES data.

Q-2 earnings are a very important part of the puzzle for investors right now.

What has been driving stocks throughout Y 2019 is optimism about the Fed policy and a trade agreement with China, among other things.

Wall Street’s main indexes have retreated from their record closing highs after a robust June NFPs report Friday tempered expectations of an aggressive 50 bpts interest rate cut by the Fed.

Focus this week is on Fed Chairman Powell’s remarks at his 2-day testimony before the Congress, starting Wednesday. Also due Wednesday is the central bank’s June FOMC policy meeting minutes.

Note: All 3 major averages topped session highs in the last 30 mins with the S&P 500 briefly peeking its head out of negative territory following headlines that USTR Robert Lighthizer & Treasury Secretary Steven Mnuchin spoke to China Vice Premier today in pursuit of continuing trade talks with China.

All Key HeffX-LTN indicators remain Bullish in here.

Stay tuned…