The market has worked hard in recent weeks to find some good news to drive prices higher. The primary driving force has been hopes that the Fed will aggressively cut interest rates in the months ahead. There is some minor optimism about trade with China, but the consensus view now is that it could be months before any real progress is made.
Economic reports have been poor with weaker-than-expected consumer sentiment and new home sales reported today. That hasn't mattered that much, because it helps to cement the likelihood of Fed rate cuts. But Fed member, James Brian Bullard, and Fed Chair, Jerome Powell, were not quite as dovish as the market would have liked when they made speeches Tuesday. Bullard shot down the potential for a 0.5% rate cut at the next meeting and Powell was still vague about what will happen in July.
Without the celebration of a dovish Fed, market players just didn't have any good reason to buy. The indexes broke out nicely last week, but were overbought and need some rest and resets to be more appealing on a technical basis.
President Donald Trump is scheduled to meet with China's Xi Jinping on Saturday, but the market no longer is optimistic about the potential for a positive headline. It has been disappointed too often with optimistic platitudes and it expects more of the same.
It was a trend-down day with a close near the lows. There were no signs of dip-buying interest and minor support levels did not hold. Breadth was about 2600 gainers to 4750 decliners, which isn't good, but isn't terrible. New lows expanded to 170, but there were still over 200 new highs. Gold miners took a rest and gold (GLD) reversed intraday day, but I don't believe that the rally in precious metals has ended. A little rest is all they need.
Have a good evening. I'll see you tomorrow.