EmailThe U.S. stock market struggled again on Thursday, failing to hold early gains and ultimately closing at its lows for the session on the back of steady selling interest. That selling activity left the S&P 500 down 1.2%. The more notable move for technical analysts is that yesterday's loss left the S&P 500 below its 200-day simple moving average.
The futures market isn't finding a bid this morning either as the negative bias has persisted.
Under steady selling pressure throughout the night, the S&P futures are down 6 points but are off their lows of the morning. At their current level, they are trading 0.3% below fair value, which is setting the stage for a lower open for the cash market.
The current disposition of the futures market is noteworthy considering China reported a round of generally good economic data that included better-than-expected retail sales (+14.5%), industrial output (+9.6%), fixed asset investment (+20.7% through first ten months from a year ago), and tame consumer inflation (CPI +1.7% yr/yr).
In months past, China's encouraging economic data probably would have sparked a rally, certainly in commodities if not in equities. This time, however, the capital markets have been basically unswayed by the news.
Copper and oil prices are down this morning, foreign equity markets have fallen (including China), the U.S. stock market is indicated lower, Treasuries are gaining, and the dollar is up against most major currencies.
Risk aversion continues to be the predominant order.
Concerns about the prospect of a fiscal cliff compromise and renewed worries about a eurozone breakup, which are rooted in brinkmanship over additional aid for Greece, continue to weigh heavily on sentiment.
An earnings report from Disney (DIS), viewed by some analysts to be unimpressive, is also having a negative impact this morning. Shares of DIS are trading 5.5% lower in pre-market action.
A weak earnings report from J.C. Penney (JCP) and a JPMorgan Chase downgrade of Cisco (CSCO) from Overweight to Neutral are also having a negative bearing on the early dealings.
The fiscal cliff factor, though, is superseding all else as a major market driver.
On a related note, President Obama will offer remarks at 1:05 p.m. ET today on the economy. Those remarks will certainly call attention to the need for a fiscal cliff compromise.
Any indication from the president that he might be open to entitlement reform and rethinking his position on taxing the wealthy could help spur a turnaround trade. To be sure, the market will be listening intently to how President Obama's compromise views stack up against those communicated by House Speaker Boehner on Wednesday.
In the meantime, participants will be watchful of the market's technical action and whether buyers step up with the S&P 500 below its 200-day simple moving average.
The performance of Apple (AAPL), the University of Michigan Consumer Sentiment reading for November (Briefing.com consensus 83.0; prior 82.6) at 9:55 a.m. ET, the direction of the euro, and the president's remarks will help dictate the course of today's trading.
