Yields and Stocks Resume Slide

Yields and Stocks Resume Slide

Market Moves

Stocks took another major tumble on Monday, following last week’s surge in volatility, as persistent economic concerns pummeled investor sentiment.

The sell-off was driven by a combination of persistently escalating trade and currency tensions between the U.S. and China, intensified anti-government protests in Hong Kong that led to cancellations of all departures from the city’s international airport, and bond yields that continue to plunge. Relentlessly falling yields remain a serious problem for investors, as they underscore expectations of an economic downturn and potential recession brought on by slowing global economic growth and trade conflicts.

The chart of the S&P 500 (SPX) shows the clear breakdown in technical structure both last week and on Monday. Last Monday’s drop of nearly 3% was the worst one-day decline so far this year. It prompted the index to gap down and slice below both the key 50-day moving average and a major uptrend line extending back to the December lows. Though subsequent days last week saw a sharp relief rebound, price remained below the 50-day average.

And Monday’s drop again pressured the index below the major trendline. Market volatility and investor skittishness appear here to stay, at least for the time being. Any further drop could target the next major downside support area around 2,800, where the 200-day moving average is currently situated.

Bond Yields Approach New Lows

China Large-Cap ETF Falls to Key Support

The Bottom Line

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