The US stocks are continuing their decline with the Dow now down 700 points or 1.70%. All the Dow 30 stocks are lower.

Stocks

The S&P index is down -88 points or -1.60% at 5408.87. That is getting closer to this 100 day moving average of 5391.77. The price move below its 100 day moving average back on August 5 (the day the Nikkei fell -12.4%). The price closed back above that moving average level on August 8.

S&P

What are some catalysts:

  1. The debate results tilt toward Kamala Harris. The markets are scared although the policies she cites are less arming than Pres. Biden. The corporate tax rate is expected to move higher. The chatter about capital gains taxes increasing for those making more than 1M per year.
  2. Core inflation was still high with shelter continuing to be a problem.
  3. China weak.
  4. The Fed cutting by 50 bps is off the table.
  5. Perception of slower US growth ahead.
  6. Geopolitical risks remain

Postives:

  1. Oil prices are lower.
  2. Yields are lower which lowers mortgage rates. The 30year mortgage rate is down to 6.29% in the current week. That is the lowest since the end of January at 6.25%. The high was 7.76%. The rate has come down -151 basis points. The 10-year yield from its high to recent low moved from 5.021% to 3.605% or -142 basis points lower.
  3. The stock market did well under Biden too.
  4. Initial jobless claims are not pointing to a recession.
  5. Real weekly earnings rose which points to productivity gains.