The S&P 500 Index (^GSPC) is battling another round of broad selling which is pushing the benchmark’s 120-Day Moving Average into worrisome territory for David Nelson, Chief Strategist, at Belpointe. “Its an important line in the sand and a close below that is going to trigger a lot of selling.”
For the month of October, the S&P 500 is in the red and a fresh string of profit warnings from the likes of SodaStream (SODA) and Samsung may mean more selling, according to Nelson. “We are already getting quite a number of warnings, some of them pretty significant, it is skittish, it's nervous, I’m nervous, I think investors will be raising cash levels here.”
Strong dollar may mar multinationals
Some investors may already be raising cash, especially those who did not anticipate the dollar’s rally over the past three months which has prompted a sell-off in commodities such as oil and gold.
The dollar’s strength, while reflective of an improving U.S. economy, may crimp profit and sales at U.S. multinationals which are already dealing with a slowdown in Europe.
IMF cuts global growth forecast
Tuesday, the International Monetary Fund (IMF) cut its forecast for global growth to 3.3% in 2014 down from 3.4% and lowered its 2015 forecast citing weakness in regions including Europe and geopolitical risks in the Middle East. On a positive note, the IMF expects the U.S. economy to 2.2 percent this year, an improvement from an estimate of 1.7 percent.