US Stock Market Overview – Stocks Rebound to Close Higher, Trade Negotiation Headlines Drives Sentiment

Prices inflation remains subdued
David Becker
S&P 500 daily chart, April 29, 2019

US stocks whipsawed tumbling lower and then rebounding. Stocks were under pressure following the installation of higher tariffs on 200-billion dollars worth of Chinese goods and services. Tariffs are widely expected to slow growth around the globe as they don’t benefit either party. Secretary Mnuchin was on the tape in the afternoon saying that talks with China were constructive. The US Labor Department reported subdued consumer prices, and Uber came to the market with an IPO, which had a lot of fanfare. Sectors were mixed, with defensive utilities leading the markets higher, healthcare was the worst performing sector.

The chart of the daily S&P 500 index shows that the index held support near the 50-day moving average, but was down slightly more than 2% for the week, which was the worst week of the year. The Dow Jones industrials experience whipsaw price action as the index had a 450 point rebound. It was only last weekend was the markets became aware that a trade agreement was not in the cards. The VIX volatilty index was up 25% for the week but dropped 16% on Friday. Volatility will likely continue as trade negotiation headline risk continues to perpetuate.

Trump Believes Tariffs are Good

Following the installation of increased tariff which jumped to 25% on 200-billion worth of goods from 10%, Mr. Trump took to twitter and in a series of tweets, he continued to back tariffs as good for the US economy, following an increase in US tariffs. He either believes this or he knows its not true but believes his base with believing him. He also said the US will continue to negotiate but there is no need to rush.

CPI is Buoyed by Energy and Rents

The CPI index rose 0.3% on Friday according to the Labor Department. Prices were driven higher by gasoline, rents and healthcare costs. The CPI increased 2% year over year after rising 1.9% in March. Expectations had been for CPI to rise by 0.4% in April and climb 2.1% year over year. The core consumer prices index, which excludes volatile components sucyh as food and energy, rose 0.1% month over month and 2.1% year over year. Core CPI increased by 2.0% year over year in March.  Gasoline prices were one of the drivers rising 5.7% in April after rising 6.5% in March. This was offset by a dip in food prices which declined 0.1% in April after gaining 0.3% in March.

Uber Stumbles Out of the Gate

Uber came to the public market on Friday, notching a rare decline for a high-profile IPO as the ride-hailing firm begins as a public company. The company’s stock opened at $42 a share after notching up an IPO price of $45. The decline is a blemish for Uber, which staged one of the most hotly anticipated initial public offerings.

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