Trade Threats Send Stocks Reeling

Here is a daily recap of the S&P 500 broken down by sector followed by sector heat map as trade threats send stocks reeling. Stocks in heat map are based on the top 10 holdings of each sector ETF. Click on each picture to zoom in. Below is a summary of today’s action on Wall Street provided by CNBC:

US futures point to higher open ahead of Powell’s speech

U.S. stock index futures were higher Friday morning, as market participants awaited a key speech from the Federal Reserve’s top official. At around 02:15 a.m. ET, Dow futures rose 120 points, indicating a positive open of more than 104 points. Futures on the S&P and Nasdaq were both slightly higher.

The S&P 500 (SPY) dropped -2.59% today. All 11 sectors lost at least 1% in the selloff as shown below in the sector graph. Energy (XLE) -3.35% and technology (XLK) -3.31% led the market lower. Communication services (XLC), consumer discretionary (XLY), financials (XLF), healthcare (XLV), industrials (XLI) and materials (XLB) each lost more than 2%. Consumer staples (XLP), real estate (XLRE) and utilities (XLU) each lost more than 1%.

The Dow Jones index cratered, losing -623 points (-2.37%) to close at 25,628. The Nasdaq crashed -239 points (-3%) to settle at 7,751.

Trade Threats Send Stocks Reeling

Stocks sank Friday following a series of President Trump tweets sending trade tensions soaring.

Major averages had weekly losses for the 4th consecutive week. Dow lost 1%, S&P 500 -1.4% and Nasdaq -1.8% for the week.

Trump’s tweets come after China unveiled new tariffs on Chinese goods. China will implement new tariffs on another $75 billion worth of U.S. goods, including autos. The tariffs will range between 5% and 10% and will be implemented in two batches on Sept. 1 and Dec. 15.

Earlier in the day, stocks teetered around the flatline after Federal Reserve Chairman Jerome Powell delivered a speech from an annual central banking symposium in Jackson Hole, Wyoming.

In it, he said the Fed will do what it can to sustain the current economic expansion. “Our challenge now is to do what monetary policy can do to sustain the expansion so that the benefits of the strong jobs market extend to more of those still left behind, and so that inflation is centered firmly around 2 percent.”

He also noted there is no “rulebook” for the current U.S.-China trade war, adding that “fitting trade policy uncertainty into this framework is a new challenge.”

The yield curve inverted briefly again on Friday, but was mostly flat throughout the day. The spread between the 10-year Treasury yield and the 2-year rate also inverted on Thursday after Fed members indicated a September rate cut was not a certainty, raising fears that the central bank would not be quick enough to save the economy from a recession. The yield curve has been a reliable recession indicator in the past.

Key Takeaways…

I took the following CNBC screenshots today regarding retail earnings, retail this week, Fed Powell on trade slowdown, Fed rate cut probabilities and driving the action:

Notable S&P 500 Movers…

Below I’ve highlighted some notable S&P movers (both winners & losers).

Credit: Sector Graph provided by Sector SPDR app. Sector breakdown provided by Charles Schwab. Sector heat map provided by finviz. Information Credit: News Headlines and quotes were taken from CNBC in the writing of this post.

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8/23/19

S&P 500 Sector Graph

Trade Threats Send Stocks Reeling

S&P 500 (SPY)

Trade Threats Send Stocks Reeling

Communication Services (XLC)

Trade Threats Send Stocks Reeling

Consumer Discretionary (XLY)

Trade Threats Send Stocks Reeling

Consumer Staples (XLP)

Trade Threats Send Stocks Reeling

Energy (XLE)

Trade Threats Send Stocks Reeling

Financials (XLF)

Trade Threats Send Stocks Reeling

Real Estate (XLRE)

Trade Threats Send Stocks Reeling

Healthcare (XLV)

Industrials (XLI)

Materials (XLB)

Technology (XLK)

Utilities (XLU)

S&P 500 Sector Heat Map

 

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