Trade deal worries between China and the U.S. dominated the headlines all week. A large gap down Monday morning due to some Trump tweets was mostly fended off as buyers came in hot and heavy. A significant selloff ensued Tuesday. The rest of the week ended up choppy but without significant end of day moves up or down.
Trump’s tweet Sunday night was:
For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars….
Then Friday those tariffs were announced as happening although there will be a grace period before they are instituted which market watchers believe is to allow time for the late stages of this trade agreement to continue.
“Goods currently in transit to the U.S. from China aren’t subject to the new 25% tariffs, just the old 10% tariff. That grace period was not included in previous rounds of tariffs and is likely an olive branch of sorts to the Chinese side,” Tom Essaye, president of the Sevens Report wrote. “Given shipping times, goods sent from China today will take two weeks or so to reach the U.S., so if a trade deal is stuck in that time frame, the pain of the 25% tariffs will never be felt.”
It was a poor week for the Chinese market.
Uber (UBER) IPO’d Friday and fell below the initial IPO price of $45.
No major economic news this week.
For the week, the S&P 500 fell 2.2% and the NASDAQ 3% – that broke a 6 week winning streak for the NASDAQ.
Here is the 5 day weekly intraday chart of the S&P 500 … via Jill Mislinski.
The week ahead…
We are through the bulk of earnings season but still some heavy hitters such as Walmart (WMT) are due soon.
Wednesday the retail sales report for April will be released, which could give investors a clue as to whether the slump that began in December was a temporary blip or the beginning of a worrisome trend.
Obviously the trade deal will continue to be a central focus.
Short term: The S&P 500 reversed at fall 2018 highs. Some may call that a double top which is a negative. But this market has made fools of everyone bearish for a decade.
The Russell 2000 has been stuck in a range really since February.
The NYSE McClellan Oscillator has been in the red for a few weeks now – it finally mattered this week.
Long term: Things are still strong longer term.
Charts of interest / Big Movers:
Monday, Sinclair Broadcast Group (SBGI) soared 35% to a record high, and the biggest one-day gain in 10 years, after the TV broadcasting company’s deal to buy regional sports networks from Walt Disney.
Tuesday, Mylan (MYL) fell more than 23% Tuesday, after the drugmaker reported a revenue shortfall that offset a profit beat.
Lyft (LYFT) slid 11% Wednesday after the ride-hailing company late Tuesday reported quarterly earnings for the first time since its initial public offering in March. The company reported first-quarter losses that were wider than expected, but revenue that topped expectations.
TripAdvisor (TRIP) sank 11% after the company posted first-quarter earnings that beat analysts’ expectations, but revenue that widely missed forecasts.
Thursday, Etsy (ETSY) sank 11% after the online marketplace reported first-quarter earnings Wednesday evening, with the company reporting profit and sales that grew more slowly that analysts had predicted.
Roku (ROKU) popped 28% Thursday following a Wednesday-evening earnings report that showed the streaming platform company beating earnings expectations for the first quarter, while it forecast second-quarter revenue that also beat estimates.
Have a great week and we’ll see you back here Sunday!