Last Week
“Slip sliding away, slip sliding away
You know the nearer your destination
The more you’re slip sliding away”
Paul Simon
The stock market posted its seventh negative week out of the last nine, as tariff whipsaw and the standoff between the Federal Reserve and the White House weighed on investors during holiday-shortened trading. News of a pause on Chinese electronic tariffs on Monday lifted Apple’s stock price and overall sentiment. President Donald Trump and other officials also made public remarks about positive trade negotiations with multiple countries, except China. On Tuesday, strong earnings results from Bank of America and Citigroup kept the market steady. Still, the slipping and sliding resumed on Wednesday, highlighted by trade war news as Nvidia and AMD disclosed anticipated charges by the U.S. on some of their products exported to China. The hump day slump worsened after Federal Reserve chair Jerome Powell expressed concerns about the higher-than-anticipated effects from tariffs. The Fed is in a box of pain as it tries to balance its dual mandate of healthy employment with a stable price level. Thursday was mercifully quiet leading into the holiday weekend, except for a 22% plunge in UnitedHealth Group shares.
For the week, the S&P 500 slipped 1.5%, the Nasdaq Composite slid 2.6%, while the Russell 2000 was a bright spot, gaining 1.1% as some bargain hunters scooped up depressed small-cap shares. A modest positive aspect of the week was that the number of advancing issues more than doubled decliners, with only the Technology sector suffering significant losses. The dollar continued to weaken, and gold again reached new record highs. The international financial community’s “sell America” mood is gaining momentum and calls for monitoring. The yield on the 10-year Treasury eased 6 basis points to 4.3%, while the 10-year TIP (Treasury Inflation Protected) could be an intriguing alternative with a 2% coupon plus the annual inflation accretion.
The Chicago Sports Scene remained in a bear market, as the Bulls’ season ended with a 19-point trouncing in the NBA Play-in game by the Miami Heat. The Blackhawks finished in last place in the Central Division of the NHL, and the White Sox are on pace to top the record they set last year as the worst team in Major League Baseball history. There is early-season joy in Wrigleyville, as the Cubs are in first place in the National League Central.
This Week
Earnings season will kick into full gear, with more than 100 S&P 500 companies, including Tesla and Alphabet, reporting first-quarter results.
The economic calendar is busy with flash PMIs, existing home sales, jobless claims, and a final reading on consumer sentiment. The Fed’s Beige Book on U.S. economic activity will also be released.
Whereas corporate earnings and economic data are important, it is likely that the White House will still control the trading tone as it continues to reinvent the entire global trading, supply chain relationships, and the structure of the U.S. government. We recommend investors with short-term cash needs tread carefully during this slippery period of heightened volatility, while those with long-term horizons can focus on the opportunities presented by companies that report solid fundamentals trading at discount prices.
The stocks mentioned above may be holdings in our mutual funds. For more information, please visit www.nsinvest.com.