Weekly Market Commentary

The Markets

Trade war trade-off.

There was some good news on trade, last week. The United States took steps to reduce trade friction with the European Union, Canada, Mexico, and Japan.

“The United States on Friday reached an agreement with Canada and Mexico to remove steel and aluminum tariffs, which had been a persistent source of friction across North America over the past year. The deal on metals came as Mr. Trump decided not to press ahead immediately with levies on EU and Japanese automotive products – despite declaring that foreign car and vehicle imports represented a threat to U.S. national security,” reported James Politi, Jude Webber, and Jim Brunsden of Financial Times.

Weekly Market Commentary

The Markets

Trade talk trouble took a toll last week.

Major U.S. stock indices moved lower when trade talks between the United States and China broke down. The Standard & Poor’s (S&P) 500 Index, Nasdaq Composite, and Dow Jones Industrial Index all finished the week down between 2 percent and 3 percent, reported Ben Levisohn of Barron’s.

Despite the weak weekly performance, the S&P 500 remains up 14.9 percent year-to-date.

The deadline to settle U.S.-China trade issues was Friday. When it passed without any resolution, the U.S. increased tariffs on Chinese goods to 25 percent, reported the BBC.

Weekly Market Commentary

Weekly Market Commenatry

The Standard & Poor’s 500 Index is off to its best start in 20 years.

Despite the exceptional performance of U.S. stock markets year-to-date, and data that suggest economic growth remains steady, some analysts and investors have been pecking at Federal Reserve Chair Jerome Powell. They’re keen for the Fed to implement a rate cut, which could stimulate economic growth and help push stock markets higher, because inflation is lower than ideal, reported Howard Schneider and Ann Saphir of Reuters.

Recent data suggest core inflation is at 1.6 percent. That’s below the Fed’s target rate of 2 percent. Fed leaders have said they think low inflation may be temporary. Until a trend has been established to their satisfaction, they intend to do nothing. The Reuters article explained, “…preemptive…rate moves in either direction appear off the table for now, absent some unexpected event that raises new risks or shocks the economy into a higher or lower gear.”

Weekly Market Commentary

The Markets

It wasn’t an ‘Avengers End Game’ spoiler, but there was big news last week.

Economic growth in the United States was strong during the first quarter. The Bureau Of Economic Analysis (BEA) announced gross domestic product (GDP), which is the value of all goods and services produced in the United States, increased by 3.2 percent.

The estimate came as a surprise. It was well above the consensus forecast of 2.3 percent, according to Randall Forsyth of Barron’s. In addition, as The Economist pointed out,

“This year America’s economy did not get the freshest of starts. A government shutdown, a wobbly stock market and concerns that the Federal Reserve would tighten monetary policy too quickly made for a dim outlook for 2019. With the effects of fiscal stimulus fading, and momentum in the global economy ebbing, most expected America’s economic growth to decelerate.”

Weekly Market Commentary

The Markets

And the answer is…

A Jeopardy! contestant captured the nation’s attention last week by setting multiple records for the most money earned in a single episode. The Standard & Poor’s 500 Index has been setting some records, too.

Michael Mackenzie of Financial Times explained:

“Less than four months through the year, the S&P 500 including the reinvestment of dividends has returned to record territory, along with the technology sector…Around the world, many benchmarks enjoy double-digit gains, led by China’s CSI 300 index, having risen more than a third already during 2019.”

Pessimism about economic growth prospects has kept institutional investors – including professional money managers whose performance is typically evaluated quarterly – on the sidelines. As a result, despite a “market-friendly shift by central banks and an expansion in China’s credit growth that laid the ground for a rebound in activity,” they have missed out on some significant gains.