Finally, this crazy week is over! It was all about the Fed at the beginning, but the focus shifted quickly to trade by the end.
When the dust settled, stocks had one of their worst weeks of 2019. The NASDAQ dropped 4%, while the S&P slipped 3.2% and the Dow declined 2.7%.
The big blow of the week came yesterday when President Trump threatened an additional 10% tariff on $300 billion worth of Chinese goods, which would take effect on September 1. The news comes after the first trade negotiations between the two countries since the G-20 weeks ago.
Earlier, the market got the 25-basis point cut that everyone expected, though investors didn’t think the Fed was dovish enough in its outlook for future cuts. The major indices sold off on the news, but were rebounding before the infamous trade Tweet.
The tariff threat was still being felt on Friday with stocks dropping right at the open, though the major indices managed to come off their lows by the close.
The NASDAQ still slipped by 1.32% (or more than 107 points) on Friday to 8004.07, while the S&P was off 0.73% (or about 21 points) to 2932.05.
The Dow had plunged more than 300 points at its worst of the session, but cut those losses significantly by the close. It finished lower by ‘only’ 0.37% (or around 98 points) to 26,485.01.
Under normal circumstances, the government’s monthly jobs report would be the main event of the week. This time though, it was just a dud. The economy added 164,000 jobs last month, which was pretty much inline with expectations.
What does next week have in store for us? We know for certain that earnings season will continue, which is good news since the reports have been better than expected so far.
However, we have no idea about the next chapter in this trade conflict. The market will be at the mercy of the news flow again on this issue. Let’s hope for some boring headlines so the market can regroup a bit… unless, of course, the U.S. and China decide to strike a deal and be done with it!
But don’t hold your breath...
Today's Portfolio Highlights:
Technology Innovators: This pullback is a great buying opportunity for stocks that have posted strong results, according to Brian. Case in point, MagnaChip Semi (MX) is a Zacks Rank #1 (Strong Buy) that reported a strong beat and raise quarter this week. Over the past four quarters, the company has topped the Zacks Consensus Estimate with an average surprise of 123%! The editor was especially impressed that this analog & mixed-signal semiconductor products company also raised its guidance for margins, which bodes well for next quarter. Read the complete commentary for more on the addition of MX and be ready for another buy on Monday.
Value Investor: "As I've said many times over the years about various geopolitical events such as the Eurozone Crisis or Brexit, the stock market hates uncertainty.
"What we have now is extreme uncertainty.
"And this is coming off of one of the best first half for stocks since the late 1990s.
"August is usually a tough month for stocks, even without a trade war raging. All investors should look for a volatile month and the possibility that some investors will take their money to the sidelines.
"If these trade tensions persist, or get worse with Chinese retaliation, and the talks drag on into the fall, the Fed is back in play with another cut at their September meeting." -- Tracey Ryniec
Have a Great Weekend!
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