Remember last week? Markets were running over with optimism that growth in the U.S. and global economies continue strong in 2019, that the U.S.-China trade war was headed to a resolution, that earnings growth in reports for the fourth quarter would be above projections.
Today, as U.S. markets digest the news after Monday’s market holiday, we seem to be back to pessimism.
Reports that the U.S. has turned down an offer from China of preparatory talks ahead of the January 30-31 scheduled trade negotiations have reversed hopes that the two countries were making significant progress on turning the current tariff truce into a lasting agreement. The truce runs to March 2.
Johnson & Johnson (JNJ), a paragon of stable growth, warned that it expects growth to slow or actually come to a halt in 2019 with revenue growth of somewhere between 0% and 1%. Projections a year ago looked for sales growth of almost 2% in 2019.
U.S. stocks have caught up with weekend projections of slower growth from the International Monetary Fund and a plethora of warnings from the global financial honchos meeting in Davos Switzerland.
Today, as of 1:30 p.m. New York time the Standard & Poor’s 500 stock index was down 1.65% and the Dow Jones Industrial Average was lower by 1.59%. The decline in the S&P 500 took the index back to the 2626 level that has ben pivotal in recent trading. As you might expect from pessimism on progress in China talks, big U.S. exporters to China are down today. Boeing (BA) is off 2.78% and Caterpillar is down 3.68%.
Other growth-associated plays are also down. For example, West Texas Intermediate crude is down a big 3.01% and international benchmark Brent has dropped 2.84%.
Safe havens (or at leas safer havens) are up today with the Japanese yen gaining 03% against the U.S. dollar and gold up 0.6%.
The CBOE S&P 500 Volatility Index (VIX), which climbs when more investors and traders decide to buy hedges against market volatility, is up 14.38% today to 20.36.