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US stocks sink for a second consecutive day as earning season begins

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US stocks fell for a second consecutive day after Citigroup kicked off earning season and the US government partial shutdown extends for the 23rd consecutive day.  The dollar traded mixed and Treasuries were steady.  The S&P 500 index ended the day lower by 0.5%, while the Nasdaq fell 0.9%, and the Dow dropped 0.4%.

Earlier in Asia, risk aversion hit global indexes as Chinese trade data highlighted a bigger slowdown with exports and imports.  Economic forecasts were high for softer readings as the frontloading effect was fading away, but the data came in much worse than expected.

Before the New York open, US stocks were lead initially lower after Citigroup, the first major company to report, had mixed results with the top and bottom line.  Many traders focused initially on a steep decline in fixed income, a key part of their business.  Shares eventually turned positive as many focused on their optimism for 2019.  Evercore noted Citi’s results were reasonable and that net interest income, loans and deposits grew nicely.

Price action on the S&P 500 index shows that price continues to respect the 2,600 level.  This major resistance level also coincides with a potential bearish Gartley pattern.  If valid, we could finally see an attempt to test the lows from December.  Many analysts have been looking for a retest of the recent lows before we could see another major push higher.  If the bearish correction is short-lived, upside could target the 2,680 region.  Major resistance lies at the 2,800 level.  To the downside, 2,320 remains critical support.

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
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