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As they say on the street, “buy the rumor, sell the news.” And that’s certainly what has happened over the last trading sessions. Last week, the promise of a huge deal drove stocks higher as investors looked for an end to the trade war between the U.S. and China. Heading into this week, stocks rallied hard on this premise. Unfortunately, the news, or in this case the lack of news, caused stocks to freefall all week. With no official trade deal, investors took the chance to sell stocks and book gains all week.
Not helping has been a relatively mixed data picture. The start of the new month brought plenty of economic data this week and the numbers weren’t as bullish as before.
This spilled over into the earnings side of the equation as well. As the earnings season has progressed, many firms have beaten estimates. However, the amount of these beats, as well as overall EPS growth, has slimmed down. Add in cautious outlooks, and investors were once again on the defensive this week.
With the lack of a trade deal and bullish catalysts, stocks ended the week on a low note.
Be sure to check out our previous Wrap here, when the trade war was about to end.