Summary:
Stocks fell globally on Wednesday on disappointing Tesla and European luxury earnings, while oil prices struggled amid weak demand concerns.
Stocks sagged worldwide on Wednesday as earnings from Tesla and European luxury brands disappointed, while oil prices struggled on concerns over weak global demand.
Market Decline Led by Technology Losses
On Wall Street, all three main indexes finished lower, led by losses in technology. The S&P 500 and Nasdaq100 ended at multi-week lows with the latter index posting its biggest daily loss since late 2022.
Mid-July has historically marked a turning point for the market and August is typically the worst month for outflows from passive equity and mutual funds., the Goldman Sachs said, citing data going back to 1928.
Those funds have increased their equity exposures for a third quarter. As for trend-following systematic funds, positioning has reached maximum length, indicating there’s no room for further buying.
Weak seasonality, stretched positioning and with all the good news already priced, the index is on the precipice of a summer correction. The investment bank said investors should not buy the dips.
As stocks tumbled, the VIX shot to 18.46, the highest since late April. Options on the VIX changed hands at nearly twice the usual pace on Tuesday though the market decline has not proved a rout.
The Nasdaq has dipped below 50 SMA, trading around the lows in June. A bearish reversal in the medium term could be more convincing if 18,900 is not respected.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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