Scary S&P Charts Are Back After FedEx, Micron Awaken Macro Dread
(Bloomberg) -- A calm close for stocks was shattered and the S&P 500 was again plumbing worrisome chart levels after the release of earnings news that grazed several Wall Street sore spots.
“Tomorrow, the market will be a real barn burner," said Donald Selkin, chief market strategist at Newbridge Securities, in a phone interview. “Even though they’re in different industries, there’s a common theme that they’re both indicative of the slowing worldwide growth.”
- Micron fell 9 percent after saying sales fell short of analysts’ estimates. The company also cut its planned capital expenditures, sending chip equipment makers Lam Research and Applied Materials down, too.
- FedEx slid as much as 6 percent after lowering its full-year profit outlook, citing economic weakness in Europe. Its chief financial officer said global trade cooled in recent months and cited indicators that may suggest it will slow further.
The commentary comes amid a market downdraft that has erased $4.5 trillion from U.S. equity values. Besides the growth paranoia, there’s been dread about the Federal Reserve raising rates and trade wars -- among other risks. The mini sell-off in futures comes just ahead of a potentially pivotal Fed decision that investors will scrutinize for clues to the future path of monetary policy tightening.
The latest bout of selling looked likely to send the S&P 500 back toward chart levels that have been obsessing traders of late. The big one is the intraday low touched Feb. 9. At 2,532.69, the S&P 500 was only a hairline away from it at the close Tuesday after briefly breaching the level and bouncing off of it in afternoon trading. The SPDR S&P 500 ETF Trust, SPY, fell 0.7 percent as of 5:23 p.m. in New York after-hours trading.
Some traders have been taking solace that weakness reported all around the semiconductor space has been due more to secular issues than global macroeconomics, according to SouthBay Research. The California-based firm found that built-up inventories are being caused more by falling crypto mining demand and shortfalls in the PC market.
“Despite signs of global macro slowdown and China/US trade friction, goods demand remains steady,” SouthBay analysts wrote in a note to clients Monday evening.
Still, that may not be enough to calm jittery markets that have been lurching seemingly non-stop. Recent data in China and Europe have shown signs of a global slowdown, and geopolitical concerns surrounding a potential government shutdown in the U.S., protests in France, and back-and-forth over Brexit are also top of mind.
“Many large overseas economies are showing signs of weakening,” said Matt Forester, chief investment officer of BNY Mellon’s Lockwood Advisors. “There’s a lot of things for markets to be concerned about -- against the backdrop of all the geopolitical concerns we’ve had around the globe for the last couple of years.”
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