Wall Street down as the US gets ready to strike Syria

• Middle-East geopolitical turmoil weighs on the markets.
• US inflation report and hawkish FOMC minutes didn’t affect stocks.

US stocks traded down on Wednesday’s trading on the back of heightened tensions in the Middle-east. The S&P 500 is down -0.55% to 2,648. The Dow Jones Industrial Average fell 0.6% to 24,251 while the Nasdaq Composite Index was down 0.1% to 7,094. 

Eight of the eleven major S&P 500 sectors ended the day in the red. Telecoms, material and the financial sectors were amongst the bigger losers. The energy sector was the winner of the day as it rose 0.9%.

In the Middle-east, after a suspected chemical attack last Sunday in Syria led by Bashar al-Assad, Trump promised that he would respond with an airstrike on Syria. In a Tweet, Donald Trump warned Russia, which is currently backing the Syrian regime. 

“Russia vows to shoot down any and all missiles fired at Syria. Get ready Russia, because they will be coming, nice and new and “smart!” You shouldn’t be partners with a Gas Killing Animal who kills his people and enjoys it!”. Tweeted Trump.

Kremlin spokesman Dmitry Peskov responded to President Trump: "We do not participate in Twitter diplomacy. We support serious approaches. We continue to believe that it is important not to take steps that could harm an already fragile situation."

Later in the day, Trump said that missiles "will be coming". Which should not benefit stocks. 

As the tension rises in the Middle-East, crude oil rallied hitting levels not seen since 2014. 

On the US data front, the Core Consumer Price Index annualized to March came in line at 2.1% above the 2% target of the Federal Reserve. According to analysts at ING, this opens up the possibility of the Fed hiking three times in 2018. They see the weak US dollar as a positive which will lead to higher inflation down the road. 

The FOMC Minutes’ report released today was rather hawkish as all members of the committee agree that it is appropriate to raise rates gradually. They are also upbeat on the economy’s outlook and are confident that inflation will pick up. Concerning the Personal Consumption Expenditure (PCE), favorite gauge of inflation by the Fed, the minutes say “recent readings on key factors that influence consumer spending—including gains in employment and real disposable personal income, along with households’ elevated net worth—continued to be supportive of solid real PCE growth in the near term.” 

S&P500 Index: 4-hour chart

Immediate support lies at 2,626.25, further down support is priced in at 2,585 swing low and 2,551.75 cyclical low. Immediate resistance is at 2,660 and 2,740 swing highs.