Is that earnings season is drawing near
US equities are off to the worst start to Q2 since the Great Depression. While Trump's persistent attack on Amazon is affecting FANG stocks and the industry as a whole, there's a lot of other stories going on in the background too.
China's retaliatory tariffs on pork has hurt the stock of companies such as Tyson Food, meanwhile Apple's plans to use its own chips in Macs have sent Intel shares tumbling. There's also a bit of a rotation into REITs and more stable telco stocks, away from tech and financials - uncertainty surrounding a trade war maybe?
The biggest threat is still that of a trade war - as the spillover effect towards global growth is uncertain and very much up in the air at this point. And until the US and China stops playing hardball with one another, it's hard to see a clear path for equities to recover.
The saving grace of equities may come in one to two weeks from now, and that is earnings season. Investors and analysts have built up high hopes for earnings growth in the S&P 500, and if they do follow through then that will provide some temporary relief for the stock market.
But a thing to consider is how optimistic can earnings growth continue to be when there is a potential global trade war brewing in the background? There is no doubt that will hurt earnings growth of many global companies - so while earnings may be a beat, a less certain outlook heading into the next quarter will weigh on stocks instead.
