Trade Tensions Affect Stocks

Weekly Commentary — 8/12/19

The Week on Wall Street

Stocks spent much of last week rebounding from a Monday drop that reflected nervousness about the U.S.-China trade fight. By Thursday’s closing bell, the S&P 500 had regained all its Monday losses – but it descended again on Friday.

The three big U.S. equity benchmarks finished the week lower: the S&P declined 0.46%; the Dow Jones Industrial Average, 0.75%; the Nasdaq Composite, 0.56%. A broad index of foreign shares, the MSCI EAFE, lost 0.95%.[1],[2]

China Devalues Its Currency

Last Monday, stocks fell 3% in reaction to the overnight weakening of the Chinese yuan. A weaker yuan makes Chinese exports cheaper for buyers who pay for them in dollars.

Critics quickly accused China of manipulating its currency to strike back at the U.S. The federal government plans to impose tariffs on nearly all Chinese products next month, likely making those goods more expensive to American consumers; a weaker yuan could counter the effect of those import taxes.[3],[4]

Earnings Season Update

Ninety percent of S&P 500 firms have now reported second-quarter results. Their collective sales and profits have surprised to the upside.

Stock market analytics firm FactSet says that overall earnings have beaten estimates by 5.7%. Seventy-five percent of firms have reported actual earnings per share surpassing estimates, which is better than the five-year average.[5]

Final Thought

We are seeing a significant bond rally this summer, even with interest rates at very low levels. (When bond prices rise, bond yields tend to fall.) At the moment, about a quarter of the global bond market is invested in government notes with negative interest rates. The 10-year Treasury stands in contrast. Friday, it was yielding 1.74%.[6],[7]

 

THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: The July Consumer Price Index appears, reporting the country’s monthly and annual rate of inflation.

Thursday: July retail sales numbers from the Census Bureau.

Friday: The initial August University of Michigan Consumer Sentiment Index presents the latest snapshot of household confidence in the economy.

Source: Econoday / MarketWatch Calendar, August 9, 2019

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Monday: Sysco (SYY)

Wednesday: Cisco (CSCO)

Thursday: Alibaba (BABA), Applied Materials (AMAT), Nvidia (NVDA), Walmart (WMT)

Friday: Deere & Co. (DE)

Source: Zacks, August 9, 2019

 

“Love yourself for who you are, and trust me, if you are happy from within, you are the most beautiful person, and your smile is your best asset.”  

– Ileana D’Cruz

 

Cake Tasting, Wedding Dress Shopping, and Tax Planning, Oh My! 

If you or someone you know is getting married this year, they should include tax planning on their wedding preparation checklist. Here are some tax tips to remember before you tie the knot:

  • Check your withholding, and if you’re going to change your filing status (for example, going from single to married filing jointly or married filing separately), you’ll need to complete a new W-4and Employee Withholding Allowance Certificate.
  • If you’re changing your name after you get married, you need to report your new name to the Social Security Administration. The name on your tax return must match the name on file at the SSA.
  • If you’re moving, make sure to fill out a Form 8822, Change of Address

This wedding season, love is in the air. Knowing these tax tips will help you or someone you know successfully include the IRS in all the fun.

* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov[8]

 

Share the Wealth of Knowledge!
Please share this market update with family, friends, or colleagues.

 

If you have any questions or would like to learn more about developing strategies to pursue a prosperous and safe future, contact me today at Derek.Merkler@Parsonex.com! You can also visit my website to learn about how I help our service members and veterans plan for and achieve financial independence.

My blog discusses a myriad of financial topics and challenges, book reviews, and commentary on current events in the financial world to benefit our military and veteran community.  I attempt to be as thorough as possible when examining each subject but can never account for every possible scenario.  Please remember to consult with your advisers for advice on your particular situation.  Thank you for reading!

Advisory Services offered through Parsonex Advisory Services, Inc. 8310 S. Valley Highway, Ste. 110, Englewood, CO 80112 (303) 662-8700.


[1]https://www.wsj.com/market-data

[2]https://quotes.wsj.com/index/XX/990300/historical-prices

[3]https://www.bloomberg.com/news/articles/2019-08-04/asia-stocks-set-to-drop-with-trade-back-in-focus-markets-wrap

[4]https://www.bloomberg.com/news/articles/2019-08-05/china-hits-back-at-trump-with-weaker-yuan-halt-on-crop-imports

[5]https://insight.factset.com/earnings-season-update-august-9-2019

[6]https://www.cnbc.com/2019/08/07/how-bonds-with-negative-yields-work-and-why-this-growing-phenomenon-is-so-bad-for-the-economy.html

[7]https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield

[8]https://www.irs.gov/newsroom/taxpayers-should-include-tax-plans-in-their-wedding-plans

 

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