The S&P 500 closed down 1.4% on Thursday, officially a correction off its record February high. The Nasdaq which entered a correction last week dropped another 2% yesterday. The Dow Jones slid 1.3%. The Carson Group says that of the 48 S&P 500 corrections since World War II, only 12 (or 25%) have turned into a bear market (a correction of over 20%). Carson’s chief strategist Ryan Detrick does not foresee a bear market from the current correction.
Gold is hitting fresh new highs, finally reaching the $3,000/oz level.
Uncertainty around Trump’s tariff policy and his escalating trade war remains the markets’ top focus. Trump threatened 200% tariffs on EU wines and vowed he won’t bend to the widening trade fight.
It appears another last-minute bill will keep the federal government from shutting down this weekend after senate Democrats decided not block bill from passing.
Separately, the US debt ceiling will be hit this summer. The House has put an increase to the debt ceiling as part of their tax proposal, but Senate Majority Leader John Thune wants to handle the debt ceiling separately, a move to put the Democrats on record for supporting a debt ceiling increase. Trump however wants the debt ceiling and tax package paired to bypass the Democrat minority.
Republican senators are trying to address Trump’s top legislative priority, a giant package of tax cuts. The House passed a budget outline last month that included entitlement cuts while boosting border security and military spending. The Senate has yet to act on the House proposal. A frustrated 91-year-old Senator Chuck Grassley (R-IA) said about the tax cut/debt ceiling process after a White House meeting, “It was all talk talk talk… Just like the last 10 weeks.”
Dollar General (DG) beat Wall Street estimates, posting higher than expected earnings, revenue, and same-store sales growth. The company attributes the solid quarter to economic pressure felt by low-income customers. Roughly 60% of Dollar General sales come from households with incomes less than $35,000.
Corporate earnings premarket include Rockwell Automation (ROK).
The economic calendar includes preliminary UoM Consumer Confidence and UoM Inflation Expectations @ 10:00am ET.
Volatility remains high. The ES 5-day average daily range remains flat at 139.75 points.
Whale bias is leaning bullish into the US session open on lighter than recent overnight large trader volume.
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