Following a rough day Thursday that saw major averages in the U.S. drop at least 3.0%, the U.S. equity market appears poised this morning to continue its slide.  Currently, the S&P futures are trading 1.0% below fair value.

Once again, participants are fixated on big thoughts like a possible default by Greece, a collapse of European banks, and the specter of a global recession.  They are fixated on these negative scenarios, because policymakers have yet to provide initiatives that have the viability to suggest any and/or all of these scenarios can be averted.

The G20 is meeting in Washington this weekend.  A communique was issued last night in which G20 leaders noted they will do all that is necessary to preserve the stability of banking systems and financial markets and that they will do this by... wait for it, wait for it -- oh, that's right, they didn't provide any specifics.

The lack of specifics has created a forlorn sense this morning among participants that it will be more of the same from officials in a position to do something.  That is, we'll hear grand pronouncements that amount to little more than empty promises and that the big solution will only be reached after whatever crisis arises is in full swing.

Hopefully, these leaders will prove naysayers wrong, but it is understandable why confidence in that outcome is lacking at the moment.

As one might expect, risk aversion is still the prevailing mindset and recession concerns continue to percolate.  The former is reflected in the continued flight to the U.S. dollar and the Treasury market.   Remarkably, the yield on the 10-year note has pushed below 1.70% this morning. 

Recession concerns, meanwhile, are also reflected in that safety trade and the sharp drop in commodity prices, particularly oil and copper.  Gold has been hit very hard, too, but that is owed in large part to dollar strength that is driving away speculators.  The big run in gold until late has probably also left it as a source of funds for some owners looking to hold more cash in this uncertain environment.

Whatever the case may be, the only true pockets of relative strength right now appear to be the dollar and U.S. Treasuries.

Equities as a whole have been set aside in the risk-off trade, so relative strength in that asset class has been confined to individual issues. 

Nike (NKE) will qualify in that respect today after topping the fiscal first quarter consensus earnings estimate by $0.14 per share on 18% revenue growth.  Furthermore, Nike indicated worldwide future orders increased 16% year-over-year.  This is a remarkable showing by Nike considering its quarter ended in August, meaning it had to navigate the uncertainty of the debt ceiling debacle and rapidly declining equity markets.

Frankly, there is no message of a global recession in Nike's results and outlook, which is noteworthy in that Nike generates roughly 65% of its revenue outside the U.S.  Shares of NKE are indicated 4.8% higher in pre-market action.

There is no economic data today.  The equity market, therefore, will be left to its own designs. 

We know it will be a weak open.  How the market finishes will likely hinge on whether participants believe headline risk over the weekend favors positive developments in stemming Europe's debt crisis or more of the same.

--Patrick J. O'Hare, Briefing.com

Patrick J. O'Hare is Chief Market Analyst for Briefing Research, Briefing.com's institutional research service. To request a free trial, please email researchsales@briefing.com.