More from: NASDAQ

Trade News Moves the Market

This just in via email from Oak Partners, Inc. <crystal.dehaven@oakpartners.com>

The Week on Wall Street

Stocks fell sharply at the start of last week over trade tensions, then recovered with help from strong earnings and indications that U.S.-China trade talks would continue. Even so, the major indices had a down week. The S&P 500 lost 0.76%, while the Nasdaq Composite fell 1.27%, and the Dow Jones Industrial Average declined 0.69%.

In contrast, the MSCI EAFE benchmark for international stocks rose 0.19%.[1][2]

The Latest Trade Developments

A broad selloff occurred Monday after China announced it would respond to increased U.S. tariffs by boosting its own import taxes on $60 billion of U.S. products. Friday morning, the Street breathed a sigh of relief as the Trump administration decided to delay 25% tariffs planned for imported cars and car parts; they had been slated to take effect on May 18. Just hours later, President Trump announced an end to U.S. tariffs on metals coming from Canada and Mexico.

At midweek, Secretary of the Treasury Steven Mnuchin told reporters that he expected the U.S. to resume trade negotiations with China in “the near future.”[3][4][5]

Earnings Season Winds Down

The first-quarter earnings scorecard is nearly complete, as more than 90% of S&P 500 companies have reported actual Q1 results.

Stock market analytics firm FactSet notes that 76% of these firms have beaten consensus earnings-per-share estimates. Overall earnings for S&P 500 components have surpassed expectations by 5.4%. Both these percentages are above 5-year averages.[6]

Final Thought

The market is quite sensitive to trade developments at the moment, and it is unclear whether this will be a short-term trend or a long-term influence on prices. While the U.S. prepares its next moves, China also is preparing its response to any new U.S. tariffs, which could include manipulating its currency.


[1] www.wsj.com/market-data

[2] quotes.wsj.com/index/XX/990300/historical-prices

[3] www.reuters.com/article/us-usa-trade-china/tough-talk-from-china-leaves-trade-talks-with-u-s-in-limbo-idUSKCN1SN207

[4] www.marketwatch.com/story/mnuchin-says-he-expects-to-go-to-beijing-to-continue-trade-talks-in-the-near-future-2019-05-15

[5] www.npr.org/2019/05/17/724357441/u-s-to-lift-tariffs-on-canadas-and-mexico-s-steel-and-aluminum

[6] insight.factset.com/market-punished-sp-500-companies-reporting-negative-eps-surprises-in-q1


Friday’s performance marked large rally

This just in via email from Oak Partners, Inc.   You can visit their web site at http://www.oakpartners.com/

For the week, the S&P 500 gained 1.86%, the Dow added 1.61%, and the NASDAQ increased 2.34%.[2] MSCI EAFE stocks also increased, posting a 1.42% weekly gain.[3]
While the results may not seem especially dramatic, the path to get there certainly was. On Thursday, January 3, domestic stocks plunged, as factory data and a tech warning spooked investors.[4] Then, the next day, the S&P 500, Dow, and NASDAQ each gained at least 3.3%.[5] Friday’s performance marked one of the largest rallies since the beginning of this bull market.[6]

What drove the market rally?

Two key events contributed to the huge jumps on Friday: 1) the latest labor report and 2) comments from the Federal Reserve Chairman.[7]

1. December’s labor report exceeded projections.

Many people expected that the economy would add around 176,000 jobs last month. Instead, the latest data revealed that the increase was actually 312,000 new jobs in December – drastically beating expectations.[8] Not only did last month’s labor report show more jobs added than anticipated, but wage growth and labor market participation also increased.[9]

Why does this data matter?

Investors have been very concerned that economic growth is slowing. This data helped quell worries that a recession is ahead.[10]

2. The Fed shared new policy perspectives.

Fed Chair Jerome Powell told the American Economic Association that the Federal Reserve understands the market’s worries and hasn’t predetermined its future interest rate hikes.[11]

Why does this update matter?

Some of the uneasiness the markets have shown recently are a result of concerns that the Fed is tightening monetary policy too quickly. Powell’s comments indicate the Fed is sensitive to economic conditions, an update that many investors wanted to hear.[12]


[1] www.bloomberg.com/news/articles/2019-01-04/all-the-days-are-big-days-for-stocks-as-bulls-bears-trade-blows?srnd=premium

[2] http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=%21DJI®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO

[3] www.msci.com/end-of-day-data-search

[4] www.bloomberg.com/news/articles/2019-01-03/asia-stocks-to-track-u-s-losses-on-growth-worries-markets-wrap?srnd=markets-vp

[5] https://www.cnbc.com/2019/01/04/stock-market-investors-react-to-us-china-trade-talks.html

[6] www.bloomberg.com/news/articles/2019-01-03/asia-stocks-to-track-u-s-losses-on-growth-worries-markets-wrap?srnd=markets-vp

[7] www.cnbc.com/2019/01/04/stock-market-investors-react-to-us-china-trade-talks.html

[8] www.cnbc.com/2019/01/04/stock-market-investors-react-to-us-china-trade-talks.html

[9] www.bloomberg.com/news/articles/2019-01-03/asia-stocks-to-track-u-s-losses-on-growth-worries-markets-wrap?srnd=markets-vp

[10] www.bloomberg.com/news/articles/2019-01-03/asia-stocks-to-track-u-s-losses-on-growth-worries-markets-wrap?srnd=markets-vp

[11] www.reuters.com/article/us-usa-stocks/wall-st-rebounds-on-robust-jobs-report-dovish-powell-remarks-idUSKCN1OY154

[12] www.cnbc.com/2019/01/04/stock-market-investors-react-to-us-china-trade-talks.html

[13] www.bloomberg.com/news/articles/2019-01-03/asia-stocks-to-track-u-s-losses-on-growth-worries-markets-wrap?srnd=markets-vp

[14] www.reuters.com/article/us-usa-stocks/wall-st-rebounds-on-robust-jobs-report-dovish-powell-remarks-idUSKCN1OY154