Equity markets decline- The 10-Year Treasury yield drops slightly
- NASDAQ declines over 2% for the week
- Trade war and tariff talk hang over capital market action
All three major domestic equity indexes declined last week as tariff and trade war rhetoric intensified. From a quantitative perspective the tariffs threatened and imposed thus far by the Trump administration and our trading partners are immaterial within the context of aggregate global economic activity. The uncertainty it manifests for the capital markets and business is the larger point. Pundits are busy assessing various scenarios and outcomes. The headlines should continue for now. Hopefully, the commencement of Q2 earnings season in early July will offer a respite.
For the week the S&P 500 and Dow each declined less than a percent; the NASDAQ declined just over 2%. Utility and Energy stocks were the only sectors advancing for the week. Industrial stocks suffered the worst losses for the week followed by Material and Technology issues. While the S&P 500 has posted low single digit returns for the year positive performance has been driven almost entirely by the Technology and Consumer Discretionary stocks with almost all of the remaining sectors turning in negative returns except Energy.
The yield on the 10-year Treasury bond declined marginally for the week – again impacted by tariff and trade war talk.
On the economic calendar for next week is lot of housing data including the U.S. Census Bureau release of May new home sales; S&P/Case Shiller home price indexes for April; and, the National Association of Realtors reports pending home sales for May. Personal income and spending for May is released on Friday.
Earnings investment reports next week are dominated by retailers. Among those companies reporting:
Monday - Carnival
Tuesday – Lennar and Sonic
Wednesday – Paychex, Pier 1 Imports, Bed Bath & Beyond, and Rite Aid
Thursday – Accenture, Walgreens, and Conagra
Friday – Constellation Brands
Indices for the week and YTD are as follows:
S & P 500 down .89% for the week; YTD index return is 3.04%
NASDAQ Composite down -.69% for the week; YTD index return is 11.44%
Dow Jones Industrial Average down 2.03% for the week; YTD index return is -.56%
Benchmark 10-year Treasury bond yield stands at 2.90% - down slightly (2 basis points)
