Stocks are lower today, hit by bad news overseas and caution before the release of second-quarter earnings.
S&P 500 futures are down by a full percentage point, while European indexes are lower by 1.5 percent to 2.5 percent. Tokyo's Nikkei was the biggest loser in Asia, falling 0.6 percent after machinery orders posted a huge, unexpected contraction for May.
Sentiment kept deteriorating during the overnight session with China's trade growing less than forecast and European industrial-production numbers laggings estimates. There are also new worries about peripheral debt, which this time focus on Portuguese lender Banco Espiritu Santo.
Equities broke free of resistance in mid-May and rallied steadily through July 3. This morning's drop returns the S&P 500 to the same 1950 level where it peaked in early June and its 30-day moving average. The big question now facing investors is whether today's pullback represents a buying opportunity or whether more downside is coming.
Second-quarter results will help inform that decision. Earnings start flowing in earnest tomorrow with Wells Fargo and are followed next week by other major companies, such as Citigroup, JP Morgan, Bank of America, Intel, CSX, Yahoo, Google, and General Electric. Today's agenda includes weekly jobless claims, which is likely to have little impact on trading, along with retail same-store sales and quarterly numbers from Family Dollar and Progressive.
While the S&P 500, Nasdaq 100, and Dow Jones Industrial Average all climbed to new highs in the last month, transportation stocks and the Russell 2000 small-cap index lagged. Some technicians may consider that as a bearish sign.
In company-specific news, Lumber Liquidators is down more than 20 percent after pre-announcing weak results and cutting its full-year guidance. Zumiez rose yesterday afternoon on strong monthly sales, and United Continental advanced after quarterly revenue per available seat mile rose more than expected.
Commodities are mixed this morning, with oil and copper modestly lower but gold and silver rallying 1.5 percent and 2.4 percent respectively. Agricultural products are also higher.
Foreign-exchange markets paint a bearish picture as the safe-haven Japanese yen rallies across the board. Currencies associated with risk, such as the euro and Australian dollar, are sharply lower as well.
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