March 23, 2018.
It was a bloodbath on the market again and Trump seems to know just the right thing to say to spook investors and send shivers down investors’ spines. Trump announced $60 billion in tariffs against China, China then responding with an announcement of retaliatory tariffs of its own. It’s a game of chicken and the question is “Who will flinch first?” One thing is for sure – and that is, that the market isn’t happy. Trump seems to want to guarantee American tech firms an edge, hinging his legacy on America’s strategic positioning. If it was vetoing the Broadcom deal just a few weeks ago, the market now is certainly feeling the pinch. If on the domestic front, Trump tore down regulations, facilitating the ease of doing business, on the international front, Trump has done no such thing, putting up walls, real and symbolic, creating anxiety, and nervousness on both sides of the Atlantic.
Daily Summary: The Dow Jones tumbled 2.93%, the S&P 500 plummeting 2.52%. The NASDAQ shed 2.43%.
Losses picked up in the afternoon, sending the S&P 500 into the red for the year. The Fed, a day prior, did nothing to ease fears, signalling that it could unwind its easy money policy quicker than priorly anticipated. Other factors piquing already existent anxieties included Facebook’s continued weakness and the resignation of Trump’s top attorney who claimed that Trump paid him little heed.
The Dow closed at its lowest level since February, closing at its second lowest level of the year. It is officially in correction territory, trading 10% beneath its all-time high earlier in the year. The S&P 500 is 8% beneath its all-time high this year. Whereas the NASDAQ bucked the market trend two days ago, this time it was swept up as well, falling 2.1% on the day. For all 4 indexes, it was the biggest drop recorded since February 8th. On the S&P 500, 10 of the 11 sectors ended down, 8 of the 11 off by more than 1%; financial stocks constituted the weakest sector on the day. Financials were off 3.7% on the day, ending at a 6-week low. Viewed as highly sensitive to emerging trade policies, industrial stocks plunged 3.3%. Utilities, seen as defensive, ended up 0.4%. The Cboe Volatility Index (VIX) soared 31%. It has more than doubled so far in 2018.
The market shuddered after the Oval Office told the U.S. Trade Rep. to compile a list of tariffs on Chinese imports totalling $60 billion.
Facebook (FB) tumbled 2.7% – and is now trading off 2.7% for the week. The stock pulled down the tech sector, which likewise fell 2.7%. As noted, financials got clobbered, Goldman (GS) falling 3.5%, JP Morgan & Chase (JPM) tumbling 4.2%. Bank of America (BAC) spiralled 4.1%. Guess (GES) beat the consensus, soaring 28%.
Conagra Brands (CAG) also beat expectations, its shares rising 0.3%. Pandora Media (P) soared 7.8% after getting an upgrade from Raymond James.
On the Economic Diary, initial jobless claims rose 3,000 to 229,000. The number of people collecting unemployment fell to a new 45-year low. Markit’s manufacturing gauge hit a 3-year high; a service reading, though, fell from 55.9 to 54.1.
In geopolitical news, China announced, “China doesn’t hope to be in a trade war, but is not afraid of engaging in one.” J.P. Morgan Asset Management division weighed in on the developing tensions, noting, “The economic impact on both China and the U.S. will be determined by what form the tariffs end up taking. The effects are likely to be felt more strongly in the U.S. and will increase both consumer and producer prices.”
In today’s trading be primed for these economic reports. Durable goods orders will be released at 8:30, followed by new home sales at 10:00. The Baker-Hughes Rig Count will be released at 13:00, so expect movement in crude.
Today’s Hot Stocks: HQY, CTAS, NKE, KBH, MU
Have a great trading day!
|Wednesday||10:00||Existing Home Sales||5.420 M||Medium|
|Wednesday||10:30||Oil Inventories||5.0 M barrels||Low|
|Wednesday||14:00||FOMC Meeting Announcement||1.625 %||High|
|Wednesday||14:30||Fed Chair Press Conference||–||High|
|Thursday||8:30||Jobless Claims||225 K||Medium|
|Thursday||9:00||FHFA House Price Index||0.3 %||Medium|
|Thursday||9:30||PMI Composite Flash||55.2||Medium|
|Thursday||10:00||Leading Indicators||0.3 %||Medium|
|Friday||8:30||Durable Goods Orders||1.7 %||Medium|
|Friday||10:00||New Home Sales||–||Medium|
|PLCE||The Children’s Place, Inc.||AM||Tuesday|
|ESLT||Elbit Systems Ltd.||AM||Tuesday|
|GIS||General Mills, Inc.||AM||Wednesday|
|FIVE||Five Below, Inc.||PM||Wednesday|
|MLHR||Herman Miller, Inc.||PM||Wednesday|
|CMC||Commercial Metals Company||AM||Thursday|
|DRI||Darden Restaurants, Inc.||AM||Thursday|
|CAG||Conagra Brands, Inc.||AM||Thursday|
|MU||Micron Technology, Inc.||PM||Thursday|
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