US Equity Markets sold off sharply last week, as renewed economic growth concerns resurfaced following President Trump's decision to impose 10% tariffs on an additional $300 billion of Chinese goods beginning September 1st. As a result, the S&P 500 posted its worst week of 2019, dropping 3.1% to bring its gains for the year to 17.0%. The Nasdaq declined 3.9% for the week and is now up 20.6% for the year, while the Russell 2000 (small-cap stocks) fell 2.9% for the week and is now up 13.7% for the year.
Global equity markets also sold off last week due to the escalating trade tensions. Developed Markets decreased 2.6% for the week with both European and Asian markets down, reducing its gains for the year to 9.1%. Emerging Markets fell 4.3% for the week and are now only up 3.9% for the year.
US economic data were aplenty last week, and that data remain generally healthy. US Payroll gains for July of 164K slightly beat forecasts, the Unemployment Rate remains low at 3.7%, and Consumer Confidence for July surged to its third highest reading since October 2000. US Manufacturing activity for July fell slightly from June but remains in expansionary territory.
Of Interest to Us
US interest rates dropped to their lowest level since October 2016, with the yield on the US 10-Year Treasury falling to 1.85% from 2.07% the prior week. The Fed did indeed reduce the Fed Funds rate by 0.25% last week, as expected. The yield curve, which investors generally want to steepen as a sign of an improving economic outlook, actually flattened last week, with the spread between the US 2-Year and 10-Year Treasuries falling to 15 basis points from 21 basis points the prior week.
for the week ending 8/2/2019
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