Wall Street closes ina sea of red on global growth fears
- The Dow DJIA, dropped 220.77 points, or 0.9%, to 25,169.53.
- The S&P 500 fell 25.56 points, or 0.9%, to 2,706.05.
- The Nasdaq Composite Index COMP dropped ell 86.93 points, or 1.2%, to 7,288.35.
Stocks on Wall Street were ending lower on risk-off sentiment, putting an end to the bulls spectacular run of late. Comments from National Economic Council Director Larry Kudlow during an interview with Fox Business Network when he stated that there is still a long way to go before the U.S. will strike a trade deal with China sparked a risk-off sell-off.
On other media channels, CNBC was also reported that a meeting between President Donald Trump and China’s Xi Jinping isn’t likely before a March 1 deadline. However, there is an argument that Trump will not be inclined to raise tariffs to 25% and rather keep them at 10%. Nevertheless, US benchmarks were down well over 1% at their worst levels on the session.
Concerns of contagion risks also circulated North American desks following the BoE's and EC's downgrade to both domestic and global growth forecasts. The BoE's growth forecast for 2019 was downgraded significantly to 1.2% from 1.7%, while the estimate for next year was also slashed to 1.5% from 1.7%. The bank sees just one rate hike fully price in over the next three years, forecasting inflation to move below the 2% level in the coming months. The European Commission also slashed forecasts for growth in 2019 and 2020. In its Winter Forecasts, the EC cut its projection for euro area-wide growth in 2019 from 1.9% to 1.3% - "Risks remain substantial and mainly stem from potential policy mistakes across the globe."
DJIA levels
For the Dow, the recent bull run on the 61.8% Fibo retracement of the Oct 2018 decline was put into jeopardy and the 200-D SMA at 24996 is the last defence for a break of the Fibo support which would then send bears en route for the 50% Fibo of the same range located down at 24215 meeting the 21st Jan fractal lows of 24243. On the upside and above the trend reversal doji, a break to the Sep lows and the 76.4% Fibo of the Sep decline at 25668.