US Stock Market Overview – Stocks Slide and Finish Lower for the Week

US PPI remains subdued
David Becker
Light Board

US stocks traded lower as President Trump suggested a meeting with China on trade might be canceled, capping a volatile week driven by the trade war and emerging currency fight between the US and China. The VIX volatility index rebounded on Friday, rising 6% putting the implied volatility index up 2% for the week. Most sectors were lower, led down by technology and cyclical shares, while utilities bucked the trend. When defensive sectors such as utilities rise, it shows that market participants are experiencing declining sentiment. For the week the S&P 500 index was down slightly less than 0.5%. US PPI came out in line with expectations while Chinese consumer prices for food surged.

Chinese Food Inflation Surged

China reported stronger than expected CPI.  CPI was higher than expected at 2.8% year over year while PPI was a couple of ticks lower than expected at -0.3% year over year.  Excluding food and energy, CPI rose nearly 9% driven by a surge in Chinese food prices.

US PPI Remains Subdued

The Bureau of Labor Statistics reported on Friday that producer prices increased by 0.2% last month after nudging up 0.1% in June. On a year over year basis, July the PPI increased 1.7% after advancing by the same margin in June. Expectations have been for PPI to rise 0.2% in July and increase by 1.7% on a year-on-year basis. Excluding the volatile food, energy producer prices edged down 0.1% last month. That was the first decline since October 2015 and followed an unchanged reading in June. Core PPI increased 1.7% in the 12 months through July after rising 2.1% in June.

Uber Reported Weak Financial Results

Uber’s share price tumbled after the company released softer than expected Q2 2019 earnings report. The ride-hailing service missed on analysts’ top-line estimates and reported a massive $5 billion loss. Uber reported a $5.24 billion net loss in the quarter, though much of that was due to stock compensation following its IPO. Gross bookings for the service, which include its Uber ride-hailing business and Uber Eats was up 31%, but still fell short of expectations, garnering $15.75 billion versus expectations of $15.83 billion. The company now has 100 million monthly active consumers.

Saudi Aramco Plans IPO

Saudi Arabia’s oil company is reviving plans for an initial public offering. Preparations for the IPO of Saudi Arabian Oil Co., are being accelerated as government officials hope to capitalize on the positive international reaction to the state-owned company’s debut bond sale in April, which raised $12 billion.

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