Fool me once, shame on you. Fool me twice…it seems that the market continues to be fooled on the trade front. Last week, stocks rallied on the notion that the U.S. and China were finally moving toward a real deal. However, just as we’ve seen before, this week threw cold water on that idea. Reports began to hit the press wires that key differences between the two nations were not coming to a resolution. Once again, the idea that a deal would not be completed in the near future weighed on trader’s minds and they sold stocks on news.
Not helping matters was a mix of earnings with the most critical reports coming from the retail sector. Several retailers – including a few that wouldn’t be normally considered struggling – reported less-than-expected sales. Meanwhile, guidance for many retailers came in on the lighter side, with several reporting that they expect this holiday season to be less than ideal as well. With the consumer sector driving most of the economy’s gains in the last few years, this was seen as terrible news and helped push selling activity.
Elsewhere, data remained light this week, with a few slight negative points such as an uptick in weekly unemployment claims. Also, the Fed’s latest FOMC meeting minutes showed a split central bank with several governors not wanting or believing that the economy needed the latest rate cut. The poor data and conformation from the Fed that no more rate cuts are in the works also helped put traders in a sour mood over the week.
Adding in the start of impeachment testimony against President Trump and you have a recipe for a down week.
Be sure to check out our previous Market Wrap here, when it was all quiet on the street.
