Chinese economic data will determine the fate of U.S Stocks on Thursday

The second-half trend for U.S. stocks could be set before July even begins.

At about 9 pm ET Wednesday, China will release its purchasing managers index for June, a key leading indicator of growth for the world’s economic engine. The PMI is expected to slow for a second straight month, but still indicate expansion, according to economists.

Yesterday, U.S. and global stock markets were sent into a tailspin by a brand new measure of China economic growth, the Leading Economic Index from the U.S.-based Conference Board. The markets got pounded after the Conference Board revised this measure to show just a 0.3 percent increase in economic activity for April. Think about what will happen if a widely followed and current indicator shows the same trend?

"The second half will get its first indicator literally before the clock strikes midnight,” said Tim Seymour, founder of EmergingMoney.com. “Its symbolic for sure. If that number is terrible tonight, it’s going to be very upsetting to markets.”

The S&P 500 [.SPX 1043.49 2.25 (+0.22%) ] extended its loss to 14.5 percent from its 2010 closing high reached in late April. Shares linked to global growth in this country, such as Caterpillar [CAT 61.20 0.35 (+0.58%) ] and FreeportMcMoRan [FCX 60.34 -0.73 (-1.2%) ], lead the plunge. If investors lose the China growth story, it could push U.S. markets into bear territory in the next six months, investors said. The Shanghai Composite Index in China is already in a bear market, with a loss of almost 30 percent this year.

China’s PMI tonight is expected to come in at 53.1, according to the median forecast of economists polled by Reuters. That’s down slightly from May’s 53.9 figure. Any number above 50 still signals expansion.

"After extensive client discussions, we still think the sequential slowdown in China will be greater than the market has been expecting,” wrote Michael Buchanan, a Goldman Sachs Asia strategist, in a note to clients. The analyst cited the effectiveness of the government’s efforts to slow the property market for his call, but maintained that he is still “very positive on the overall China outlook beyond the near term."

If you want to see the first indication of how your second half stock investments are going to do, check those China numbers out tonight.

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Ref: http://www.cnbc.com/id/38017966

John Melloy is the Executive Producer of Fast Money. Before joining CNBC, he was an editor for Bloomberg News, overseeing the U.S. Stock Market coverage team