S&P 500 FALLS BELOW MA5 AFTER PRESIDENT TRUMP THREATENS NEW TARIFFS ON MEXICO
S&P 500 futures are currently trading at 2755- lower by 1.24% as compared to the previous close. The index Futures were closing in negative territory since the last three trading sessions.
In the cash markets, the benchmark index declined 1.12% to 2,757.52 at the time of writing. The broad-market index was down 5.3% this month through Thursday and was on track to post the first negative month of 2019.
U.S. equities fell today as traders feared the U.S. President’s threat of tariffs on all Mexico imports, amid a worsening trade war with China, could push the world’s largest economy into a recession.
The U.S. president announced late on Thursday that Washington will impose a 5% tariff on all Mexican imports from 10th June, which would then rise steadily to 25% until illegal immigration across the southern border was stopped.
Stocks of Ford and GM dropped 2.3% and 4.2% respectively on tariff news as both companies have significant production in Mexico. Union Pacific and railroads Kansas City Southern also lost 1.6% and 4.3% respectively.
The yield on the 10-year Treasury note fell to the lowest level since 2017. The U.S. benchmark was yielding 2.151% at the time of writing. It was above 2.5% at the starting of this month.
The broader financial sector fell 1.23%, while bank shares declined 0.95%.
Index-member Constellation Brands plunged 6.05% and was on track for its worst day since 9th January.
Stocks of Gap Inc. crashed 10.92%, the most among S&P 500 companies after the company cut its 2019 profit forecast.
On the economic front, Core PCE Price Index (MoM) for April released earlier today came in at 0.2%. The index change was in line with market expectations. The University of Michigan’s final consumer sentiment index reading for May also released earlier today came in at 100 versus an initial 102.4. The index reading was also below the market expectation of 102.
On the technical front, the RSI is currently at 28.67% and suggests that the market can move in the downward direction. The current price is below the MA5. The current price is below the lower band of the Bollinger bands and is heading downwards.
Overall Bias is Negative and Short-term trades can be initiated with tight Stop Loss and Take Profit targets.
Trade Suggestion- Limit Sell At 2756 Take Profit At 2743 Stop Loss At 2762