Stocks reverse on China GDP report from Goldman Sacs. Goldman Sachs analysts have cut their China GDP forecast to 4% from 4.5% after weak data in April. The bank does not expect China will start fully easing Covid controls before the second quarter of 2023. A similar statement was made Monday by Citi, which had one of the highest China GDP forecasts, cut its outlook for growth to 4.2% from 5.1%. Two major contributing factors were retail sales falling by 11.1% in April from a year ago, more than the 6.1% decline predicted in a Reuters poll. Second, Industrial production dropped by 2.9% in April from a year ago, in contrast with expectations for a slight increase of 0.4%. This led to weakness off the open but the selling accelerated when China issued a statement that phone manufacturers should slow down production because demand is waning. This sent tech stocks into a tumble for the remainder of the the day. Couple this with Walmart, $WMT , and Target, $TGT both missing earnings. Each stock was down over 25% the day after their respective earnings. With the slowing growth here and aboard coupled with rising interest rates it became a perfect storm. Investors were ok buying into the inflation and possibly slowing growth but the earnings are abysmal showing that we are most likely already in a recession . There were no safe havens except bonds which rallied. Safety names such as Proctor and Gamble and Clorox had some of their worst days on record. The XLP consumer staples and XLY consumer discretionary are both down 7% approximately today. To throw fuel on the fire after the market closed telecom juggernaut Cisco systems , CSCO , issued earnings and a statement saying not only will growth slow but it will go negative by up to 5% year over year. This led to even more selling after hours. As far as technical analysis please refer to the index and stock charts below. Bottom line until the VIX, volatility index, starts acting stronger by making higher highs the bottom is not in. For Stock trading ideas watch tonight’s video below. I go over CSCO,TSLA and several other coming out with earnings and how to trade them. Let’s get to it!
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