A verbal agreement. Friday, October 11, the U.S. announced that it had reached a verbal agreement with China, concluding two days of face-to-face talks and rampant speculation of a deal in financial markets. China agreed to purchase more agricultural products from the U.S., and the U.S. dropped plans for higher tariffs on $250 billion in Chinese goods, which were scheduled to take effect Oct.15. Stocks are down this morning, though, amid reports that China wants more discussions with the U.S. before signing the deal.
Slumping Chinese imports. We believe progress in the U.S.-China trade dispute is becoming more crucial to jumpstart global demand, as China data showed this morning. China’s imports (in U.S. dollars) dropped 8.5% year over year in September, the fifth straight decline, while China’s exports fell 3.2%. Slumping Chinese imports adds to evidence that the second-largest world economy has weakened over the past year, while pockets of the U.S. economy continue to deteriorate. We think signs of slowing growth could motivate both sides to continue working together.
Earnings preview. Corporate America is unlikely to deliver much, if any, earnings growth in the third quarter. However, we think better days lie ahead. Find out why in this week’s Weekly Market Commentary: Earnings May See Better Days Ahead.
Stocks rally to end the week. Stocks rallied on trade optimism late last week, erasing the S&P 500 Index’s 2% loss through Tuesday. Fixed income markets dropped across the board as global interest rates moved sharply higher. Review all the major indexes in the latest Weekly Market Performance.
The week ahead. This week’s economic calendar in the United States includes retail sales and Federal Reserve’s Beige Book on October 16, followed by industrial production on October 17 and the Conference Board’s Leading Economic Index on October 18. Internationally, we’ll get industrial production and Consumer Price Index data out of the Eurozone. A swath of China data is slated to be released as well, including third quarter gross domestic product, inflation, and industrial production.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.
All company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.
All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges, Index performance is not indicative of the performance of any investment.
Because of their narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.
Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
All performance referenced is historical and is no guarantee of future results.
This research material has been prepared by LPL Financial LLC.
Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC).
Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL is not an affiliate of and makes no representation with respect to such entity.
- Not Insured by FDIC/NCUA or Any Other Government Agency
- Not Bank/Credit Union Guaranteed
- Not Bank/Credit Union Deposits or Obligations
- May Lose Value
For Public Use – Tracking # 1-904234