Trump and North Korea send markets lower - Here's what to expect this week...

Market Recap for Sunday, August 13th, 2017

Stocks kicked off the week with new records on Monday.

And Tuesday morning, stocks rallied to all-time highs.

But then, a report from the Washington Post kicked off a series of events that would lead to the biggest market drop since May.

The Post reported that North Korea now has the capability of launching "mini-nukes" in missiles. Stocks dropped on the news. Selling continued in the afternoon after President Trump announced that North Korea will be met with "fire and fury" if they don't stop with their threats.

Stocks were lower again on Wednesday after North Korea revealing a detailed plan to launch ballistic missiles at Guam. But all things considered, the S&P was down just 0.3% after 2 losing days.

Then on Thursday, selling finally kicked in. Erasing week's of gains, the S&P lost 1.5% with its biggest loss since May.

On Friday morning, President Trump addressed the U.S./North Korea showdown by tweeting "military solutions are now fully in place, locked and loaded, should North Korea act unwisely."

But in spite of the escalating situation and 3-day slide, stocks took a breather on Friday. And the major indices ended the day slightly higher heading into the weekend.

Here's where the major indices ended the week:

  • The S&P finished with a 1.4% loss. Down 36 points, the S&P ended at 2,441.
  • The DOW ended 1.1% lower. Dropping 234 points, the DOW closed at 21,858.
  • The NASDAQ was down 1.5%. With a 95 point loss, the NASDAQ finished at 6,257.

Crude Oil (CL) finished the week lower. Down 1.6%, CL ended at $48.78 a barrel.

The U.S./North Korea situation helped Gold (GC) finish 1.4% higher last week. With a close of $1294.4 an ounce, Gold had its best weekly close since April.

The VIX (aka Fear Index) traded at levels not seen since the week after the U.S. Presidential election. Although the VIX pulled back from highs on Friday, the VIX still managed to end the week with its highest close in 4 months.

After last week's geopolitical concerns, trader's Fed expectations have changed. At the beginning of the week, fed funds futures showed that traders were betting on a December rate hike (based on a 50.4% probability). But by week's end, the focus had shifted to next June (the probability of a June hike is now 57.5%).

Here are this week's key reports (all times ET):

  • MONDAY - No major reports.
  • TUESDAY - Retail Sales Data and Empire State Manufacturing at 8:30am.
  • WEDNESDAY - Building Permits and Housing Starts at 8:30am, Crude Oil Inventories at 10:30am, and FOMC Meeting Minutes at 2:00pm.
  • THURSDAY - Unemployment Claims and Philly Fed Manufacturing at 8:30am, and FOMC Member Kaplan Speaks at 12:30pm.
  • FRIDAY - Preliminary Consumer Sentiment at 10:00am and FOMC Member Kaplan Speaks at 10:15am.

This Week's Economic Calendar

Real Time Economic Calendar provided by Investing.com.

Have a great trading week!

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