An initial gap higher in the Dow Jones was erased midday as investors lost faith in the positive spin Donald Trump is putting on the state of negotiations in the trade war.
While there was no major sell-off, bears are still quick to dump bounces, highlighting the uncertainty that still pervades much of the wider stock market.
As of 1:02 pm ET, the Dow Jones Industrial Average had lost 144.41 points or 0.56% to decline to 25,754.42. Earlier, the DJIA had rallied around 150 points to flirt with the 26,000 level.
Trump’s recent commentary on the trade war with China has been confusing at best. While the president successfully averted a stock market crash at Monday’s opening bell, he has not provided enough to get the Dow bulls buying more than just the dip.
This may be an intentional tactic, as Trump stated at the G7 that an erratic negotiating style works for him.
Partially as a result of this, more politically neutral traders and analysts than ever are questioning if he is mentally fit for the job.
Given Trump used to enjoy a market-friendly persona, this could be something that his PR team will try to address sooner rather than later.
Even if you ignore the US-China trade war, significant bearish fundamentals have emerged in another vital economic area – the Eurozone and UK.
Already-weak banks in Europe face the prospect of even lower rates as the once-mighty German economy continues to decline. German GDP missed expectations this morning, once again highlighting its slide into recession.
Bill Diviney at ABN AMRO believes global markets are facing a death-by-a-thousand-cuts situation, as confidence indicators continue to wane. The economist now forecasts weak core data next week in a crucial US PMI release, a bearish precursor for the Dow Jones.
“With the recent escalation in tensions, uncertainty for business will intensify further still, and likely lead to a renewed leg lower in confidence measures. While eurozone flash PMIs stabilised in August, the German Ifo reached a new cyclical low [Monday], and in the US, the Chicago PMI and the ISM manufacturing PMI are likely to signal further weakness when they are published next week.”
It is an extremely mixed day for the significant Dow stocks. Apple, Boeing, and Goldman Sachs are all trading slightly lower on the day after stronger performances yesterday.
Domestic play Verizon continues to bask in its recent rating upgrade, outperforming with 1.5% gains midway through the session.
Click here for a real-time Dow Jones Industrial Average chart.
Last modified: June 23, 2020 2:34 PM UTC