The U.S. stock market followed the lead of European markets on Tuesday and headed lower. The move in Europe started after UK Prime Minister Theresa May surprised everyone by calling for early elections in June. The Prime Minister is looking for a unified front ahead of the Brexit process. The Pound surged as the US Dollar tumbled on the news.
Goldman Sachs had its worst day in nine months, losing 5% after reporting a decline in bond trading revenue. That news caught the markets by surprise, and had the Dow opening nearly a 100 points lower to start the day. The market did not recover much after that, and traded sideways through out the day. Dow futures ended the day at 20,433 down 136 points from Monday’s close.
Earnings season is upon us. Look for negative earnings to have a strong reaction in the markets. I think the rosy outlook for a market friendly political environment is on hold for the time being. I am looking for a test of the 20,300 level during Wednesday’s session, and think wwe will probably see sideways trading dominate the day.
John Weyer
Director Commercial Hedging
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