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(Bloomberg) – US equity futures retreated, extending the biggest weekly decline in the stock market, as a weekend of bickering commercial battles kept investors glued to news displays as the season of results was ending.
June contracts on the S & P 500 Index fell 1% and futures contracts on the Nasdaq 100 index fell 1.2% at 8:20 am in Hong Kong. Last week, the S & P 500 saw a drop of 2.2% in a context of growing international divide. The administration of President Donald Trump told China that he had one month to conclude an agreement or face tariffs on all of his exports to the United States, even though both sides were looking to to avoid a break in negotiations despite the stalemate in which they found themselves.
The decline last week in US stocks was the biggest break in a stellar year in 2019 for bulls. The 18% gain in the benchmark was reduced to 15% and the index is about 65 points lower than the record of 2,945.83 reached on April 30th. Technology stocks were hit hard, the Nasdaq 100 index fell 3.3% and the Philadelphia Semiconductor index lost 5.9%.
After posting steady gains for months, confused traders are struggling to keep pace with the fast-paced news on transactions, much of which comes from Trump's Twitter account. Many have resigned themselves to worsening the decline, noting that a market negotiated at more than twice the sales is easily stretched.
"A decline of 5% to 7% is normal in any recovery, but it becomes almost inevitable when" new negative news "is introduced in a market that has been bought too much and whose valuations have been extended," wrote Matt Maley, a manager. strategist at Miller Tabak and Co. "Investors should stop worrying about the market's collapse due to the problem of the trade war and determine the (lower) levels at which they want to buy more of their favorite names.
Over the weekend, Larry Kudlow, the White House's chief economic advisor, said higher tariffs on Chinese products would have minimal impact on US growth and jobs, while conceding that "both parties will suffer "from the trade war. Kudlow told "Fox News Sunday" that China has invited US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin to Beijing, although no date has been set for new discussions.
At the same time, the People's Daily, the Chinese Communist Party's flagship newspaper, said the United States should take full responsibility for the failures of the trade talks because they have increased tariffs on Chinese products, reported the national television. China was looking for a mutually beneficial deal but the US has backtracked, the state broadcaster CCTV reported on Sunday, citing a comment released by the newspaper on Monday.
Outside of the trade war, US investors will see April retail sales data on Wednesday, which should post a 0.2% gain after a 1.6% gain in March. Housing starts and several factory reports will give a more accurate picture of the economic dynamics of the second quarter.
To contact the reporter about this story: Sarah Ponczek in New York at [email protected]
To contact the editors in charge of this story: Jeremy Herron at [email protected], Chris Nagi
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