With Europe having to play catch up to the washout in Wall Street yesterday, US futures are finding some relief at least but the question seems to be how long can it last?
The snapshot of the performance of US stocks yesterday was abysmal to say the least with the S&P 500 closing down 4.3%, Nasdaq down 5.2%, and the Dow down 3.9% at the end of the day. For the latter, it is the lowest daily close since 18 July while the former two are closing in on their 6 September lows respectively.
In the case of the S&P 500, that coincides with the 61.8 Fib retracement level of the bounce from June to August near 3,900. The confluence of support levels will make it more interesting, with a break below that likely to set off the next downside leg for equities.
For now, there is some bit part relief with S&P 500 futures up 0.5%, Nasdaq futures up 0.6%, and Dow futures up 0.4%. However, with US PPI data and Wall Street set to enter the fray later, the picture might easily turn around if Fed fears are reignited in the second-half of the week.
