The U.S. stock futures began the day with a downward trajectory as market sentiment turned cautious following disappointing trade data from China.
Stock-Index Futures Performance
- S&P 500 futures (ES00) declined by 16 points, or 0.4%, landing at 4522.
- Dow Jones Industrial Average futures (YM00) experienced a fall of 104 points, or 0.3%, settling at 35450.
- Nasdaq 100 futures (NQ00) eased by 71 points, or 0.4%, to reach 15414.
Previous Day’s Trading
On Monday, the Dow Jones Industrial Average saw a rise of 408 points, or 1.16%, closing at 35473. The S&P 500 also witnessed an increase, gaining 40 points, or 0.9%, and finishing at 4518. The Nasdaq Composite followed suit, gaining 85 points, or 0.61%, and ending the day at 13994.
Concerns Over Slowing Global Economy
Global markets experienced a general risk-off sentiment, albeit to a mild extent, as weak China trade data added to worries about an economic slowdown worldwide. China’s exports registered a decline of 14.5% for the year leading up to July, representing the largest drop since the outbreak of the COVID-19 pandemic in February 2020. Additionally, imports slumped by 12.4%, surpassing forecasts.
According to Jim Reid, a strategist at Deutsche Bank, this news indicates “that the world’s second-largest economy is being dragged down by weak global demand and a domestic slowdown.”
Market Update
The global market faced a downturn as assets sensitive to China’s demand experienced a decline. Industrial commodities such as crude oil (CL) and copper (HG00) witnessed a decrease, putting pressure on shares of London-listed miners.
On the other hand, perceived safe havens saw increased demand, leading to a rise in the value of the dollar and a surge in government bond purchases. Consequently, Treasury yields experienced a decline.
Adding to the negative sentiment was the possibility of Moody’s downgrading six major U.S. banks. This further fueled concerns about the fragility of the financial sector, which has been grappling with a sharp rise in interest rates since March 2022.
Despite these challenges, the second quarter earnings season persists. Companies like UPS (UPS), Barrick Gold (GOLD), Eli Lilly (LLY), and Under Armour (UAA) are expected to release their financial results before the market opens. Later in the day, Super Micro Computer (SMCI), AMC Entertainment (AMC), and Lyft (LYFT) will also be presenting their numbers.
Key economic updates for the United States scheduled for Tuesday include the release of the U.S. trade balance for June at 8:30 a.m. Eastern Time and the June wholesale inventories report at 10 a.m. Eastern Time.
Moreover, market participants can look forward to hearing from influential figures within the Federal Reserve. Philadelphia Fed President Harker will be sharing his insights at 8:15 a.m. Eastern Time, followed by Richmond Fed President Barkin at 8:30 a.m. Eastern Time.
