In this week’s recap: domestic and international stocks sell off as higher tariffs go into effect for Chinese goods coming to the U.S., while the wave of notable initial public offerings continues.

As of the Week of May 13, 2019

THE WEEK ON WALL STREET

As we noted recently, Wall Street has a wandering eye. Last week, it focused on the new tariff threats in the ongoing U.S.-China trade dispute. Stocks fell across five trading sessions: the Dow Jones Industrial Average lost 2.12%; the S&P 500, 2.18%; the Nasdaq Composite, 3.03%. International stocks also fell: the MSCI EAFE index declined 3.06%.

Earnings and big-name initial public offerings mattered little last week. Traders were more concerned about how consumers and corporations might be affected by higher import taxes in future quarters.1,2 

TARIFFS INCREASE

At 12:01 am on Friday, duties on $200 billion worth of Chinese products coming to the U.S. rose from 10% to 25%. Just days earlier, President Trump had tweeted that the U.S. might also tax another $325 billion of Chinese imports, mainly consumer goods.

While the proposed new taxes might take months to implement, institutional investors reacted negatively to this information, perceiving that trade talks were stalled.3,4 

FINAL THOUGHT

A few weeks ago, market watchers noted the huge number of initial public offerings anticipated for 2019. One well-known tech firm completed its IPO on Friday, and the wave of tech IPOs is still building. According to research firm CB Insights, the average stock market valuation of the venture-capital-backed tech companies going pue. In

another bit of good news, personal spending rose an impressive 0.9% in March.4-5

Final Thought

On Wednesday and Thursday, stocks fell in the wake of the Fed policy statement. Friday, they more or less recouped their losses after the impressive April jobs report. Ups and downs like these come with the territory when you invest; the key is to stay patient and think long term instead of short term.

What’s Ahead

Note that U.S. stock and bond markets will be closed on Good Friday (April 19).