EM Divergence Signals Pause May Be Ahead for U.S. Stocks: Chart

(Bloomberg) -- Emerging-market shares aren’t confirming the latest move higher in U.S. stocks, in a worrying sign for the American equity market, according to Tom McClellan, editor of the McClellan Market Report. The iShares MSCI Emerging Markets ETF, which holds large- and mid-cap stocks from developing nations, shows a “meaningful looking divergence” from the S&P 500 Index, McClellan wrote in a note Wednesday. While it’s possible emerging equities could converge up with their U.S. counterparts, McClellan’s conclusion is that a pause is looming for the American rally.

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