US Stock Market Overview – Semi’s Lead Technology Shares Higher

Morgan Stanely warns of a recession
David Becker
Sahm Unemployment Index and Gold

US stocks moved higher on Monday, as technology shares rallied into earnings releases. The Dow Industrials were the lagger. Boeing traded under pressure as issues with the 737 Max continue to weigh on the industrial index. Sectors were mixed, as the Nasdaq was led higher by technology shares.

The semi-conductor space was on fire following an upgrade from Goldman Sachs. Consumer staples and materials were the worst performers. Energy shares received a boost on Monday, driven by a rally in both crude oil and natural gas. Morgan stanely believes that there is a credible case for a recession and that interest rate cuts might come to late. The halt in the production of Boeing’s 737 Max could weigh on Q2 GDP, which further points to slower US growth.

Boeing Production is Weighing on GDP

The grounding of the Boeing 737 MAX is begging to weigh on US growth as the lack of production is hurting the nation’s trade balance and clouding the outlook for airlines. There are several companies that supply Boeing with parts including General Electric which is the sole manufacturer of the engine for the MAX. Several US airlines are cutting back on routes and capacity growth or delaying pilot hiring and promotions. Additionally, the production cuts at Boeing’s will likely weigh on US GDP in the second quarter.

Ford Curtails Sales to China

Ford Motor Company reported that its push to expand in China this decade has veered off course, due to tariffs and the trade despite. Fords sales in China fell 27% in the first half of the 2019 year over year, as a downturn in the Chinese car market extended to a 12th month in June. The sharp drop-off in China auto sales is challenging even stronger and more-established global car manufacturers in the country, like General Motors.

Morgan Stanely sees a Case for a Recession

Morgan Stanely believes that interest rate cuts might come too late to save the US economy. Morganc Stanely chief economist Ellen Zentner told clients in a lengthy analysis that spells out the likelihood of negative growth within the next 12 months. Trade tensions that could lead to layoffs and a pullback from consumers are at the center of the recession case.

Elizabeth Warren Sees Warning Lights

Democratic presidential contender Senator Elizabeth Warren from Massachusetts warned on Monday that the next financial crisis is on its way. She said that warning lights are flashing. Warren points to increasing household and corporate debt has left the economy on precarious footing.

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