Stocks had their worst week since December driven by renewed trade fears as the US proposed new tariffs on China. The S&P 500 fell 3.1% and the Dow dropped 2.6% for the week. Abroad, Japan declined 2.6% and Europe slumped 3.2% for the week. The 10- year Treasury yield ended the week at 1.86%, its lowest level since the 2016 presidential election.
President Trump announced a new 10% tariff on the roughly $300 billion worth of Chinese imports that had yet to be taxed. The tariffs go into effect on September 1st. The tariffs were announced after negotiations this week between the US and China yielded little progress. The news rattled markets.
The Fed made the expected move of cutting its benchmark Fed Funds rate a quarter percent to target 2.0% to 2.25%. The move was designed to help cushion the US economy from growing global economic weakness. It was the first interest rate cut since 2008. Investors were disappointed in comments made by Fed Chairman Powell after the meeting as he didn’t allude to any further rate cuts. The Fed also announced it would end the runoff of its $3.8 trillion bond portfolio two months earlier than expected, a supportive move for the economy.
The July jobs report came in right in line with expectations with 164,000 new hires and the unemployment rate remaining at 3.7%. The average hourly wage rose to 3.2% from 3.1% in June. June and may hiring was revised down by 41,000.
The Conference Board’s consumer confidence reading hit its highest level this year in July.
The Fed’s preferred inflation gauge the Personal Consumption Expenditures Price index rose 0.1% in June for a trailing year gain of 1.6%.
The eurozone economy grew at a 0.8% rate in the second quarter, a steep slow down from 1.8% growth in the first quarter. Manufacturing confidence fell to its lowest level in six years.
The Justice Dept. approved the merger between T-Mobile and Sprint after they agreed to sell assets to satellite TV provider Dish Network. The move combined the nation’s number 3 and 4 wireless carriers.
Of the 225 S&P 500 firms that have reported earnings to date, 179 have posted better than expected results. Analysts now expect a 2.5% contraction in earnings for the quarter, better than the expected 3.0%.
A hacker took 106 million credit card customers and applicants’ personal information in one of the largest ever data breaches of a bank.