Markets Pare Early Losses, Trade Dominates Headlines
US: S&P 500 Index -0.8%, Dow -0.7%, Nasdaq -1.7%
Europe: STOXX Europe 600 +1.2%, German DAX +1.5% France CAC 40 +2.1%, U.K. FTSE 100 +2.1%
Asia: Japan Nikkei -0.5%, China Shanghai Composite -2.0%, Korea KOSPI -2.5%
Rates/Commodities: 10-Year Treasury yield -8 basis points to 2.39%, WTI crude oil +2.1%, COMEX gold: +0.0%
Markets closed slightly lower for the week, as the S&P 500 Index showed resilience in a three-day winning streak after one of the worst days of the year. On May 13, the S&P 500 fell 2.4%, its biggest one-day loss since January. The index then pared that loss through the end of the week.
Renewed trade tensions have led to this latest bout of volatility. The recent drop in the S&P 500 Index felt worse because of how quickly it happened—from new highs to down nearly 5% in less than two weeks. Keep in mind stocks have come pretty far pretty fast, beginning with the strong rally at the first of the year that put the S&P 500 back at record highs.
Out of the woods yet? U.S. equities are drifting lower this morning, but remain well off the week’s lows following the S&P 500 Index’s 2.4% drop on Monday. While the 2800 level has offered technical support, we want to be mindful that stocks only pulled back about 4.5% on a closing basis. Continue reading
U.S. stocks have held up fairly well over the past week even as U.S.-China trade tensions have flared up. The S&P 500 Index is less than 3% below its record high on April 30. Continue reading
Chinese economy clearly slowing. The latest round of Chinese data for April (retail sales, capital investment, and factory output) all missed expectations and pointed to slower growth. While China will report 6% gross domestic product (GDP) growth or more-consistent with their stated objective-actual growth is probably closer to 5%. Continue reading
As we noted yesterday, the recent bout of volatility has caught many investors off guard. However, we’ve been saying since late March that some type of normal correction could happen, and we’ve taken a more cautious stance.
This was one of the best starts to a year ever for equities, which historically has led to modest returns the next six months, with an above average chance of a large correction.
The latest on trade. According to Reuters, President Trump told reporters that the trade war with China was “a little squabble” and his friendship with President Xi was “unlimited,” while continuing to insist that talks hadn’t collapsed. Continue reading
Volatility resources. U.S. stocks’ slide deepened May 13 with the worst one-day sell-off since January 3. The S&P 500 Index now sits 4.6% from all-time highs reached two weeks ago. While it has been a turbulent May for investors, it’s important to consider how quickly U.S. stocks have recovered this year, and how prone the S&P 500 has been to a mid-year bout of volatility. Continue reading
U.S. stocks’ slide deepened May 13 with the worst one-day sell-off this year since January 3.
On Monday, the S&P 500 Index dropped 2.4% amid threats of higher tariffs on all Chinese imports and retaliatory measures from China. The index now sits 4.6% from all-time highs reached two weeks ago.
Trade fears drove stocks to their worst week of the year, down 2% after President Trump placed higher tariffs on $200 billion of Chinese goods and threatened fresh tariffs on an additional $325 billion in Chinese goods after the Chinese reportedly backed out of a trade agreement. It could’ve been worse, but talks in Washington, D.C., were reportedly constructive, according to Treasury Secretary Steven Mnuchin, which helped stocks get back some of the losses from earlier in the week.