Major assets are reflecting deepening concerns about the durability of bull run for stocks which will mark its 10th year in about a month.
What’s our damage so far?
The bullish dynamic for risk assets on Wall Street is beginning to unravel, clearly. Blame it on trade-war fears, at least partly sparked by a May 5 tweet from President Donald Trump, or peg it to worries that the global economy is facing a pronounced slowdown. In any case, major assets are reflecting deepening concerns about the durability of bull run for stocks, which will mark its 10th year in about a month.
Here is how the market is setting up:
Nasdaq nears correction territory
The Nasdaq Composite Index (COMP) stands down 7.6% from its record on May 3. Most market participants view a decline of at least 10% from a recent high as representing a correction. S&P 500 threatens to fall below 200 day.?
The S&P 500 (SPX) is trading at or near its 200-day moving average, at 2,776.04, as of Wednesday afternoon trade. A breach below that point would represent a longer-term bearish momentum shift for the broad-market index. Market technicians tend to view moving averages as the demarcation between bullish and bearish momentum in an asset.
Bonds have trounced stocks
The exchange-traded iShares 20+ Year Treasury Bond ETF (TLT) has gained 4.4% since May 3, compared with a negative 5.5% return for the S&P 500 and a negative 5.2% return for the Dow Jones Industrial Average (DJIA)
The 10-year Treasury note yield fell below the 3-month note, deepening an inversion of the yield curve, which measures the difference between the yield on the longer-dated Treasury and its shorter-dated counterpart.
Such rate inversions are rare because investors tend to demand higher yields for extending loans over a longer period. Therefore when rates invert it is viewed as a signal that an economic recession is in the offing. The 3-month/10-year inversion currently stands at the most severe since 2007.
Related video: Bond market just flashed a warning signal for stocks (provided by CNBC)
- Boeing lands its first new order for planes at the Paris Air ShowThe "Squawk Box" crew talk about several of the morning's top stories.CNBC
- Coca Cola and Pepsi among the biggest ocean polluters, report saysAn analysis by 24/7 Wall Street has listed the corporations which contribute the most to ocean pollution worldwide. Veuer's Susana Victoria Perez has more.Veuer
- LGBTQ-themed ads are everywhere. But it hasn't always been this wayIn 2019, LGBTQ-themed ads are all over the place. And they’re now more diverse than ever. WSJ’s Spencer Macnaughton takes a look at how these ads have evolved over the last five decades. Photo Composite: Adele Morgan/The Wall Street JournalThe Wall Street Journal.
The bond market just flashed a major warning signal for stocksCNBC8:48
Boeing lands its first new order for planes at the Paris Air ShowCNBC0:57
Coca Cola and Pepsi among the biggest ocean polluters, report saysVeuer1:14
LGBTQ-themed ads are everywhere. But it hasn't always been this wayThe Wall Street Journal.7:28
The most expensive lease in AmericaFox Business1:02
11 homes that are out of this worldINSIDER3:47
Consumers could face higher prices under new China tariffsCBS News1:17
Facebook to launch bitcoin digital currency rivalReuters - US Video Online1:18
Huawei says US actions will cost it $30B in revenue over 2 yearsNewsy1:12
Ford invested $500M into electric vehicle startup Rivian, which is doing what Tesla isn'tBusiness Insider6:37
This is how to tell if you're in the American middle classVeuer0:56
Police seek smart doorbell networks to solve crimesUSA TODAY0:55
New campaign advocates for Phoenix as a tax haven for CaliforniansFox Business2:54
Will the Fed cut rates? Key factors it considers in a rate adjustmentThe Wall Street Journal.4:45
Domino's just announced a new self-driving delivery partnershipCNBC1:17
Boeing CEO admits 'mistake' over 737 MAX sensor problemNewsy1:40
Other asset moves
The small-capitalization Russell 2000 index (RUT) which should be more resilient to trade-war issues but tend to reflect growing domestic slowdown worries, has fallen nearly 7.7% since May 3 and is off more than 14% from its August 31 peak.
The Dow Jones Transportation Average (DJT)?is down 9.4% since early May.
The Stoxx Europe 600 Index is down 10.5% since its April 15 peak and off 5.1% since early May. Meanwhile, yields on German 10-year bonds a proxy for the health of the European economy, have deepened their slide, yielding negative 0.18% compared with a yield at 0.02% on May 3, before Trump’s tweet storm.
In Asia, the Shanghai Composite Index has declined by 5.3%, while China’s benchmark CSI 300 Index? has declined by 6.4% over the same period.