Investors worried about the weakening U.S. economy and a positive response to European earnings reports are pressuring the Dollar this morning leading to a strong recovery in the equity markets after a sell-off on Wednesday threatened the structure of the current rally. U.S. equity markets broke sharply late in the trading session following a bearish durable goods report yesterday morning and a not-so-bright outlook for the economy according to the Fed’s Beige Book late in the session.
Prior to the durable goods report economists were looking for an increase of 1.0%, the actual report showed a drop of 1.0%. This news combined with an overbought situation triggered a break early in the session which took out yesterday’s low but held last week’s close. Following a delayed reaction to the Beige Book numbers, longs threw in the towel and stock indices broke. The sell-off in the September E-mini S&P 500 and September E-mini NASDAQ erased all of this week’s gains before settling slightly above Wednesday’s low.
Overnight stock index futures regained close to 50% of the correction from the top leading to this morning’s higher markets and a possible follow-through to the upside following the opening.