The S&P 500 took a hit last week after the Federal Reserve issued its first interest rate cut since 2008 and President Donald Trump threatened new tariffs on $300 billion in additional Chinese imports.
Fed pulls trigger
Markets softened last week after the Fed cut interest rates by 0.25% in a move Fed Chair Jerome Powell called a “mid-cycle adjustment,” suggesting a cautious approach to additional rate cuts. The Fed noted “global developments” and “muted inflation” as reasons for the cut.
Hopes of a trade deal with China in the near-term also took a hit when Trump tweeted Thursday that the U.S. will implement 10% tariffs on an additional $300 billion in Chinese goods not already covered under the current 25% tariffs on $250 billion in goods.
Trump said the U.S. will “continue its positive dialogue with China” and the future between the two nations “will be a very bright one.” However, the Dow Jones Industrial Average dropped 450 points within minutes of Trump’s tweets.
Trump said the new tariffs would go into effect on Sept. 1.
The comments caused massive volatility swings in the market, catching many traders off guard.
“It’s hard to trade with someone who’s very unpredictable. That was completely unexpected,” said JJ Kinahan, chief market strategist at TD Ameritrade. “It’s a negotiation. We’re just not used to seeing the negotiation happen in front of our eyes. People are getting too caught up in the negotiations.”
Earnings season rolls on
Apple and General Motors earnings came in ahead of analyst expectations last week, while shares of semiconductor giant Advanced Micro Devices sold off sharply after reporting a 13% drop in revenue.
This week, earnings season continues with reports from Disney on Tuesday, Lyft on Wednesday and Uber and Kraft Heinz on Thursday.
S&P 500 companies generating more than 50% of their revenue from outside the U.S. have averaged a 13.6% decline in earnings so far in the second quarter, while companies generating the majority of revenue within the U.S. have averaged a 3.2% earnings gain, according to FactSet.
Economic numbers
In addition to earnings reports and potential trade war headlines, investors will be watching the Institute of Supply Management Non-Manufacturing Purchasing Managers Index number on Monday and the monthly Job Openings and Labor Turnover report on Tuesday. Economists are anticipating ISM Non-Manufacturing PMI of 58.3 and 7.268 million job openings.
Guess who
This company aims “to be the best sports company in the world.” However, before its transformation into a global brand with this grand mission, it was just another small business with a vision. It found its humble beginnings in 1924 from a wash-kitchen in Germany, but it wasn’t until 1954 that the brand truly began to take off. This was when its shoes were recognized for their role in the underdog West German team’s World Cup victory. Since then its soccer ball has also become the official ball for the FIFA World Cup.
After his passing, the founder, Adolf "Adi" Dassler, was inducted into the American Sporting Goods Industry Hall of Fame for his contributions to the modern sporting goods industry. His company was one of the first to attach computer systems to its equipment to track an athlete’s statistics. It also led the way in sports-inspired streetwear fashion.
Currently, it has key locations across Amsterdam, Portland, Boston, Shanghai, Hong Kong and Panama. It has 57,000 employees worldwide from 100 various nationalities and continues to expand. In 2018, it saw double-digit growth across its North America, Greater China and e-commerce branches.
Answer: Adidas
Business term of the week
Market capitalization: This is used as a valuation method calculated by multiplying the number of outstanding shares by the stock’s current price. Typically, a larger number here indicates a higher valuation and stability level for the company. On a stock chart, it is abbreviated as mkt cap.
Benzinga is a financial news and data company headquartered in Detroit.
https://www.freep.com/story/money/business/2019/08/03/market-outlook-smart-investor-benzinga-adidas/1901745001/
2019-08-03 09:50:00Z
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