Stocks dropped on Tuesday and were expected to begin lower after markets trembled at unexpectedly dismal Chinese trade data and a warning about the health of US banks.
The Dow Jones Industrial Average (DJI) futures decreased by 180 points, or around 0.5%. The S&P 500 (GSPC) and the heavily weighted Nasdaq 100 were both down roughly 0.5% at the same time.
Bank Can Recover
After statistics revealed a far worse-than-anticipated decline in Chinese imports and exports in July, hopes for a global economic recovery that may boost equities were dashed on Tuesday. The dismal results show that demand is still declining, which lessens the likelihood that the second-largest economy in the world can recover.
A Moody’s downgrading of 10 small and midsize US banks that came with a warning that it would drop credit ratings for some of the biggest lenders in the country further dampened emotions. It highlighted possible stressors in the industry, which has been keenly studied since the financial crisis earlier this year, in their commercial real estate assets.
Federal Reserve Once Again Suspend It’s Rate
While this was going on, bank stocks throughout Europe plummeted when the Italian government announced it would impose a 40% windfall tax on bankers’ earnings, sparking concerns that other nations may follow suit. The reaction reduced the market value of banks by $10 billion.
Investors are anticipating the release of the July inflation data on Thursday in order to determine whether the Federal Reserve will once again suspend its interest rate rises. These uncertainties about the state of the economy are beginning to surface.
Another round of earnings reports is about to arrive, which might provide additional insight into the state of Corporate America. Among the highlights are the results from Fox Corp (FOXA), Restaurant Brands (QSR), Eli Lilly (LLY), UPS (UPS), and Eli Lilly.