Bears Growl Following Frantic Fed Speak

recession

U.S. markets showed strength throughout much of Wednesday’s action in anticipation of a 25 basis point cut from the FOMC. However, the selloff afterwards showed disappointment as the Fed Chairman Powell was unable to deliver the dovish policy guidance that Wall Street had been anticipating.

U.S./China trade talks concluded in Shanghai with no progress reported and kept a lid on the opening gains. China is said to be taking a wait-and-see approach to talks, adopting the view that such a tactic will produce a more beneficial agreement. Volatility spiked to late June highs but was able to hold key resistance levels ahead of the closing bell.

The Dow dropped 1.2% after testing an afternoon low of 26,719 while closing below the 27,000 level for the 1st time in 15 sessions. Upper support at 26,750 held with risk to 26,500 and the 50-day moving average on a close below this level.

The Nasdaq was also lower by 1.2% after tapping a 2nd-half low of 8,110. Major and upper support at 8,100-8,050 held with a close below the latter and the July low of 8,059 would be a bearish development with high risk towards 8,000-7,950 and the 50-day moving average in play.

The S&P 500 sank 1.1% following the late day plummet to 2,958 on the close back below the 3,000 level. Prior and upper support from mid-July at 2,975-2,950 was breached but held with a move below the latter getting 2,925 and the 50-day moving average in play.

The Russell 2000 fell 0.7% despite testing a midday peak of 1,599 and showing strength in the final hour of action. The plummet to 1,568 after the Fed news breached near-term and upper support at 1,575-1,560 and a level that failed to hold by a half-point.

There was no sector strength. Consumer Staples was the hardest hit sector after tanking 2%. Technology and Materials tumbled 1.5% while Consumer Discretionary and Industrials were off 1.2% and 1.1%, respectively.

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ANALYST UPGRADES/DOWNGRADES

BP (BP) upgraded to Buy from Hold at Jefferies
Expedia (EXPE) upgraded to Buy from Hold at Argus
U.S. Bancorp (USB) upgraded to Neutral from Underweight at JPMorgan

AMD (AMD) downgraded to Hold from Buy at Craig-Hallum
Dow (DOW) downgraded to Outperform from Top Pick at RBC Capital
Total (TOT) downgraded to Equal Weight from Overweight at Morgan Stanley

THURSDAY'S EARNINGS ANNOUNCEMENTS  
Before the open: Arrow Electronics (ARW), BCE (BCE), Clorox (CLX), Dunkin’ Brands Group (DNKN), Exelon (EXC), General Motors (GM), Kellogg (K), Mr. Cooper Group (COOP), Olympic Steel (ZEUS), Rapid 7 (RPD), Shopify (SHOP), TopBuild (BLD), Verizon (VZ), Wayfair (W), Xylem (XYL)

After the close:
​Ashford (AINC), Beazer Homes (BZH), Cardtronics (CATM), El Pollo Loco Holdings (LOCO), Etsy (ETSY), Fluor (FLR), GoDaddy (GDDY), Herbalife Nutrition (HLF), ID Systems (IDSY), Legg Mason (LM), Medifast (MEDI), Motorola Solutions (MSI), PDF Solutions (PDFS), Qorvo (QVRO), RealPage (RP), SolarWinds (SWI), Teradata (TDC), U.S. Steel (X), Western Union (WU)


UPCOMING ECONOMIC NEWS
Thursday’s economic reports (EST): 
Challenger Job-Cut Report - 7:30am
Jobless Claims - 8:30am
PMI Manufacturing Index - 9:45am
ISM Manufacturing Index - 10:00am
Construction Spending - 10:00am


METALS / OIL
Gold closed at $1,437.80 an ounce, down $4.00
Silver settled at $16.41 an ounce, down $0.15
Copper finished at $2.66 a pound, down $0.01
Crude Oil was at $58.00 a barrel, down $0.05
Bitcoin Investment Trust (GBTC) ended at $13.64, up $0.87


I hope this helps you prepare for the trading day. Make it a great one!


   Todd Mitchell


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