US: Renewed sell-off in equities - BBH

The renewed sell-off in equities is the most important market development as the S&P 500 was sold in eight of the past ten sessions for a two-week drop of more than 7%, explains Marc Chandler, Global Head of Currency Strategy at BBH. 

Key Quotes

“The threat of a trade war did not spark the decline, but it appeared to provide extra fuel.”

“The S&P 500 shed 2% before the weekend, while the NASDAQ dropped 2.4%.  This will likely spur losses in Asia and Europe to start the new week, with gap risk likely.  The proximity of the end of the month, quarter, and for some, the fiscal year, may keep some who might otherwise be inclined to see the drop as a buying opportunity sidelined.  The 2532-2554 area is the next important technical area.  It corresponds to the February spike low and the 50-week moving average, and below there is 2478, the 50% retracement of the gains since November 2016 election.   The 61.8% retracement is found near 2385.”

“The S&P 500 finished the week just above the 200-day moving average (~2585), which had been frayed in last month's downdraft.  The benchmark has not closed below this average since June 2016 when it was trading around 2000.”

“Growth stocks lagged on the way up, but they are leading on the way down.  The Russell 1000 Value Index fell 5.4% last week following a 5% the previous week. It is off 5.7% year-to-date.  The Russell 1000 Growth Index fell 2.1% last week and 4.7% over the past two weeks.  It is off just shy of 0.5% so far this year.”