Wednesday, 12 June 2019

US stocks give up gains, “rally not fundamentally backed”

Markets were mostly higher on Tuesday.

Early in the day, Asian markets rose, with the Nikkei 225 gaining 0.3 percent and the Shanghai Composite surging 2.6 percent. The STOXX Europe 600 rose 0.7 percent.

However, the S&P 500 gave up early gains to close flat.

Some analysts were probably not surprised by the pullback in US stocks.

“This rally is not fundamentally backed,” said Tom Essaye, founder of The Sevens Report.

While Fed funds futures suggest that traders are pricing in about 60 percent probability of three Fed rate cuts this year, Essaye is not impressed. “If the Fed cuts three times between here and January, this economy is headed for a recession,” he said.

“Our dispute with China is perhaps still the single largest cloud over the market,” said Mike Loewengart, chief investment officer at E-Trade Capital. “The issue is not going away.”

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