More saber rattling between China and the U.S. did little to distract the market.
On Tuesday, President Donald Trump reiterated his hard-line stance on China during a news conference with Polish President Andrzej Duda and said the U.S. had “no choice” but to levy another $267 billion in duties on China. That would come on top of announced tariffs on about $200 billion in Chinese goods announced late Monday. China responded with tariffs of 5% to 10% on $60 billion worth of U.S. products that will take effect Sept. 24, and said it may introduce more measures if the U.S. goes ahead with higher tariffs.
This seems to be the prevailing thought process, hence after the initial hang wringing Wall Street doesn’t seem too concerned anymore:
“In my opinion, I see President Trump as trying to force the trading partners to the bargaining table to renegotiate trade deals that have long favored other countries over the U.S. His methods are unconventional but the U.S. economy is strong, earnings are healthy and confidence among consumers and investors remains high,” wrote Robert Pavlik, chief investment strategist at SlateStone Wealth, in a note to clients.
“We could be near peak political trade rhetoric, but without any visible effect on economic data, investors are just looking through the noise. We’re essentially still in a negotiation phase, and until we have set policies that we can evaluate, markets will continue to ignore this to a certain extent,” said Matt Forester, chief investment officer of BNY Mellon’s Lockwood Advisors.
Interesting reversal this week in the Chinese market – especially late in the week.
For the week the S&P 500 gained 0.9% while the NASDAQ fell 0.3%. This is the TENTH gain the last TWELVE weeks for the S&P 500!
The star of the week was the Dow Jones Industrial Average: +2.3% move for the week; quite interesting action for a sector exposed to TRADE WARS(tm)! (makes you think behind the scenes people in the know are very comfortable a deal with China is happening)
Economic news was sparse and not market moving. Friday.
Before we move on we’d like to point out “pot stock” Tilray (TLRY) for a third week in a row. When last we left it it was $109 after a giant move from the $20s. It ended the week at $123. That would have been a nice move in and of itself. But in between the two Fridays it essentially rose 200% by Wednesday (@$300!) – the stock was halted multiple times Wednesday – and then gave almost all of it back. For those of you who missed the dot com bubble in 1999 we’d call a week like that: “every week”. We are not a “stock tip” newsletter but gosh, hopefully some readers caught part of this move as we’ve been highlighting the stock from quite a ways lower!
Bond yields went back to 3%+ on the 10 year.
Here is the 5 day weekly “intraday” chart of the S&P 500 … not via Jill Mislinski.
The week ahead…
Everyone is feeling cheery and comfortable whatever the news. That continues… until one day it doesn’t.
Short term: NASDAQ a tad weaker than the S&P 500 both but indexes continue to make bears unhappy. Been quite a move since May.
This Russell 2000 is basically stalled.
The NYSE McClellan Oscillator has been red for a few weeks the indexes really have not cared much. No indicator is perfect. That said, the Russell 2000 has not gone anywhere in that time and many breadth measures are not that great so it’s been a bit of a narrower rally here of late.
Long term: Still very positive for the “buy and never sell” crowd.
Charts of interest / Big Movers:
Monday, Mersana Therapeutics (MRSN) sank 23% after the U.S. Food and Drug Administration lifted a partial clinical hold on its phase I trial of its cancer treatment XMT-1522.
Tuesday, Viking Therapeutics (VKTX) surged 87% after it reported positive results in a midstage trial of a treatment for nonalcoholic fatty liver disease.
Wednesday, Molecular Templates (MTEM) jumped 52% after it announced a joint-development partnership with Japan-based Takeda Pharmaceutical Co.
Thursday, Galectin Therapeutics (GALT) jumped 15% after the company commented on a cancer combination drug trial.
Friday, GTx (GTXI) plummeted more than 92% after the company said its therapy intended for postmenopausal women with stress urinary incontinence didn’t meet the primary endpoint in a phase 2 clinical trial.
Have a great week and we’ll see you back here Sunday!