Equities are falling before a shortened trading session today
and a holiday tomorrow.
S&P 500 futures are down half a percent, while Europe is lower
by 1 percent to 2 percent after two Portuguese cabinet ministers
resigned. That raised fears that the country could face sudden
elections and derail reforms. Most Asian indexes also fell in the
overnight session, led by a 2.5 percent drop in Hong Kong as
Chinese economic data continued to disappoint. This time the
country's service-sector purchasing managers index missed
expectations, falling to its lowest level in nine months.
The market has been churning in a range for more than a month after
ripping to new all-time highs in early May. While economic
prospects have been brightening in developed countries such as the
United States and Japan, emerging markets have lagged and continue
bearish options bets
The S&P 500 has also hit resistance at its 50-day moving
average, which had provided support in February, April, and early
June. This suggests that the strong momentum--seven months of gains
between November and May--has been broken for the time being.
Attention will now focus on whether the economy can survive higher
interest rates and weakness in countries such as China and India.
ADP's private-sector payroll report at 8:15 a.m. ET is the main
event on today's calendar. Economists are looking for a reading of
150,000 for June, up from 135,000 the previous month. Challenger,
Gray & Christmas already reported that layoffs rose 8.2 percent
The market will close at 1 p.m. ET today and remain shut tomorrow
in observance of Independence Day. Friday will likely be a very
light session in terms of volumes, but it will feature the key
non-farms payroll report one hour before the opening bell. Next
week brings the start to corporate-earnings season.
Foreign-exchange markets also show a bearish pattern today, with
the euro and Australian dollar down but the Japanese yen up across
Commodities, however, are strangely bullish given the move in
equities and currencies. Oil and gold rose by more than 1 percent
and silver is up 2.5 percent. Agricultural foodstuffs are also up
across the board and copper is little-changed.