Trade Headlines Spook Traders, But Weak Energy Sector Remains Bullish

Jul 12 12:07 2018 Print This Article

Market Recap for Wednesday, July 11, 2018

Utilities (XLU, +0.90%) moved higher in an otherwise down day, highlighted by the latest trade headlines in which the U.S. announced another $200 billion in Chinese imports to be subject to a 10% tariff.  While the initial reaction was obviously negative, the major U.S. indices did hold up well after the opening bell, most likely due to a Volatility Index ($VIX) that had drifted lower to 12.50 over the past two weeks.  Stocks tend to hold up much better to bad news when the VIX is low.  I view it as a signal that the market is following technical indications, not fundamental news.  The Dow Jones fell to 24750 in the opening 10 minutes and was still at 24750 just minutes before the closing bell.  There was very little panic associated with the latest trade news as the market grows more comfortable with the rhetoric.

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