Stocks drop for 4th week in a row!

Stock Market Update Sunday, August 25th, 2019

Stocks dropped for the 4th week in a row on new tarrifs and trade worries.

On Friday, it seemed like it was going to be all about Fed Chair Jerome Powell. But this was not the case.

China announced a round of retaliatory tariffs on the U.S. And as you might expect, President Trump didn’t care much for the move.

In response to China’s tariff increase, the President ordered U.S. companies to find an alternative to China. In Friday’s tweet, Trump said, “Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA.

Stocks plummeted on the news and the major indices lost 2.4 – 3.0%.

Aside from the escalating trade war, here’s what traders were focused on last week:

  • Interest Rates & The Fed – The markets seemed to welcome Powell’s comments on Friday. Although stocks were down early, the major indices came back after Powell’s remarks. Powell said that “Our challenge now is to do what monetary policy can do to sustain the expansion so that the benefits of the strong job market extend to more of those still left behind, and so inflation is centered firmly around 2%.”

    He also pointed out that “fitting trade policy uncertainty into this framework is a new challenge.”

  • Recession Warnings – Two weeks ago there was the brief inverted yield curve that caused a bit of a panic. The possibility of an inverted yield curve continues to be on everyone’s radar.  But this past week it was manufacturing data showing possible industry contraction (instead of expansion).

The Flash Manufacturing PMI number came in at 49.5 (a reading below 50 indicates industry contraction). It was the first print below 50.0 since September 2009.

Here’s where the major indices ended the week:

  • The S&P finished with a 1.4% loss. Down 42 points, the S&P ended at 2,847.
  • The DOW ended lower by 1.0%. Dropping 257 points, the DOW closed at 25,629.
  • The NASDAQ was down 1.8%. With a 144 point loss, the NASDAQ finished at 7,752.

Crude Oil (CL) finished lower for the 2nd in a row. With a 1.0% loss, CL ended at $54.19 a barrel.

Gold (GC) rallied for the 4th week in a row. The metal closed at 1537.2 an ounce, its highest close since May of 2013.

In spite of the recession warnings and trade war worries, retail earnings were surprisingly upbeat!

Lowe’s (LOW) finished the week with a 13.3% gain after better than expected earnings, Home Depot was higher by 6.8% on an earnings beat, Target (TGT) was up an impressive 23.8% on the week, and Nordstrom (JWN) was up 12.8% for the week after strong results.

Here is the economic calendar for the week:

Real Time Economic Calendar provided by Investing.com.

This Stock Market Update was provided by Rockwell Trading Services LLC.

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