2nd Quarter Starts With A Bang!
The first week of trading witnessed the S&P500 move down by 1.4%. The finger is being pointed at new Tariff threats, as well as a weak payroll report last Friday. Year-To-Date, most stock indexes are in the red. As I’ve been writing, I certainly hope when the 2nd quarter Corporate Earnings begins, the market indexes respond positively.
It was certainly not a surprise that China responded early last week to our initial Tariffs with their own new Tariffs on US goods exported from our shores. When President Trump announced last Thursday he is proposing an additional $100 billion in additional Tariffs on Chinese imports, the markets sold off, perhaps thinking there is no positive end in sight to this important issue. The question going forward, what will really happen? Will we actually impose these Tariffs or will we walk back the rhetoric with some sort of excuse. My hope is we actually engage in proactive negotiations with our trade partners to determine the best course of action that will keep trade flowing freely. I believe free trade is the way to go, however, I believe the United States MUST be treated fairly.
Payroll Report for March – Below Expectations
Typically, we hear on the first Friday of the month what happened to jobs for the month prior. Leading up to this report houses much speculation about the future of the economy, inflation and the direction of interest rates. When the number is greater than anticipated, often time’s people believe inflation will peak its head, thereby increasing interest rates. When the number is below what is anticipated, many believe the economy is slowing and we will not have significant inflation.
Last Fridays report showed an increase of 103,000 jobs. The unemployment rate held steady at 4.1%. The jobs number was significantly below expectations, which could also have been a contributing factor to last Friday’s stock market sell-off.
This week will be light on Economic Data with reports highlighting Inflation on Wednesday and Consumer Sentiment on Friday. Light economic data points to greater short term influences of other topics, such as continuing Tariff issues or a continuation of musical chairs in the White House.
In the short-term, I do not see volatility calming, so I’m expecting to have swings in stock indexes and interest rates, in both directions. Hopefully, earnings season will again have the stock market moving upward. With so many people thinking the same thing, what will actually happen?