The major markets attempted to break the 3-week losing streak when they were seemingly upended out of the blue Friday.
The markets opened the week higher and traded mostly sideways ahead of Friday’s Jackson Hole Meeting. Every year since 1978, the Federal Reserve Bank of Kansas City has held an economic symposium. Since 1982, this has been held in Jackson Hole, Wyoming. Past meetings have featured hints of economic stimulus by the central banks and after a number of substantial days and weeks of volatility, market participants were hoping for some positive news in the form of guidance towards a decrease in the Fed Funds rate. However, Fed Chairman Jerome Powell stated during his speech titled “Challenges for Monetary Policy” that “our economy is in a favorable place…” and then proceeded to discuss recent history in context and that “Based on our assessment of the implications of these developments, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective.”
In other words, the Fed was withholding from taking any new actions at this time to stimulate or reign in inflation.
But what had initially been the focal point of the week, took a back seat when rumors of new Chinese tariffs of U.S. goods became reality, only hours before Powell’s Jackson Hole speech. Although President Trump announced the stay of new tariffs on Chinese goods until later this year, China announced early Friday morning that they would be imposing tariffs of 5-10% on $75 billion worth of US goods beginning on September 1st and December 15th; the same dates the US tariffs were originally slated to go into effect. Additionally, China announced that they planned to enact taxes on imports of us autos and auto parts beginning December 15th.
President Trump lashed out, Tweeting “Our great American companies are hereby ordered to immediately start looking for an alternative to China…” The markets reacted swiftly to the news and they fell from slightly positive on the day to registering the third worst day of 2019.
Later the President Tweeted that there would be a retaliation of new and increased tariffs. These include the increase from 25 to 30% on $250 billion worth of goods, and an increase to 15% from 10% on another $300 billion.
Over the weekend, the president flew to France for the G-7 meeting. While there, he was asked if he had any second thoughts about the Trade War which he responded to by saying “Yeah, sure, why not.” News of this sentiment spread quickly. However, shortly thereafter the White House Press Secretary Stephani Grisham clarified that President Trump intended to say that he wished he would have raised rates even more, not less.
Despite this whirlwind of activity on what is normally a quieter period of summer market activity, news made the rounds early Monday of this week that both China and the US were set to resume trade talks. President Trump praised the Chinese President and said that Beijing was actively reaching out to resume talks.
The S&P 500® Index is a capitalization index of 500 stock-designed to measure performance of the broad domestic economy through changes in the aggregate market value of stock representing all major industries.
The Dow Jones Industrial Average® (The Dow®), is a price-weighted measure of 30 U.S. blue-chip companies. The index covers all industries except transportation and utilities.
The NASDAQ Composite Index measures all NASDAQ domestic and international based common type stocks listed on The NASDAQ Stock Market. Today the NASDAQ Composite includes over 2,500 companies, more than most other stock market indexes. Because it is so broad-based, the Composite is one of the most widely followed and quoted major market indexes
The MSCI World Index, which is part of The Modern Index Strategy, is a broad global equity benchmark that represents large and mid-cap equity performance across 23 developed markets countries. It covers approximately 85% of the free float-adjusted market capitalization in each country and MSCI World benchmark does not offer exposure to emerging markets.
The MSCI Emerging Markets (EM) Index is designed to represent the performance of large- and mid-cap securities in 24 Emerging Markets countries of the Americas, Europe, the Middle East, Africa and Asia. As of December 2017 it had more than 830 constituents and covered approximately 85% of the free float-adjusted market capitalization in each country.
The S&P GSCI Crude Oil index provides investors with a reliable and publicly available benchmark for investment performance in the crude oil market.
Companies in the S&P 500 Sector Indices are classified based on the Global Industry Classification Standard (GICS®).