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Market Tries To Digest News, Looks To Earnings Season For Direction
Stocks closed mostly lower yesterday after trading on both sides of unchanged throughout the day.
The last turnaround down came late in the afternoon after it was reported that Saudi Arabia was considering to admit that 'rogue operatives', without clearance, killed journalist Jamal Khashoggi 'by mistake in an interrogation gone wrong'.
This became a sensitive market issue after President Trump last week said there would be severe consequences if the Saudi government was involved, which then led Saudi Arabia to say they would just as quickly and severely retaliate. The Saudi stock market plunged nearly -7% yesterday on that exchange of words.
The shocking admission late in the trading day for the U.S. markets pulled stocks off their highs as traders tried to digest the news.
While the rhetoric between the U.S. and Saudi Arabia has been dialed back, the market will remain focused on this story given the financial ramifications and potential for sharply higher oil prices if retaliatory measures are implemented.
But if/when it becomes clear that no such measures are to come, the markets will breathe a sigh of relief.
The market is also still processing the trade stand-off with China. But it's believed that both countries will talk trade at next month's G20 meeting. And there's hope that a friendlier tone will emerge prior to that. If so, that too would be a benefit to the market and likely result in a big relief rally.
In the meantime, the economy is on fire; earnings season has begun and is off to a good start; and October, historically speaking, is the best month for stocks, especially in mid-term election years.
See you tomorrow,
Kevin Matras
Executive Vice President, Zacks Investment Research
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Stocks closed mostly lower yesterday after trading on both sides of unchanged throughout the day. 
