Markets Lower Behind Trade Tension and Possible Tariff Escalation
Major indices and assets are trending lower after renewed trade tension between the U.S. and China ramps up and will likely result in further tariffs. President Trump already indicated tariffs would be raised from 10% to 25% by week’s end while China has since stated retaliatory tariffs will occur if the U.S. proceeds with the raise. Chinese trade delegation is due in Washington today where negotiations will continue. Uber initial public offering will price after the market closes today, many expecting the price point to sit anywhere between $44 and $50. Earnings to monitor today include Samsung, Booking Holdings, Duke Energy, Keurig-Dr. Pepper, and Nintendo. Core CPI, consumer price index, and the Federal budget are due tomorrow. The market tested it’s 50-day moving average today and SPY broke support at $286. We remain bullish on the market and do not see it breaking $280 support level, or worst case $277, which is the 200-day moving average. It is too early to think we are in a bear market, but if additional tariffs are imposed the market has a high probability to break 200-day moving average on SPY. For reference, the SPY Seasonal Chart is shown below:
Today in D.C., top trade delegations from the U.S. and China are set to meet to continue trade negotiations that were renewed last week in Beijing. After some time off between the previous set of negotiations, both sides were able to hold productive talks last week. This week, sentiment has undoubtedly changed after President Trump vowed to raise tariffs again while claiming China has broken parts of their previous agreement. China has since then stated they are willing to retaliate with their own set of tariffs it Trump goes forth with the rise to 25% on Chinese goods. Global markets felt the brunt of these claims as both U.S. and Asian markets traded lower this week while European markets, although starting the week higher, have since followed into the red. Look for further detail on the trade talks as negotiations continue and watch for tomorrow’s planned tariff increase, having already formally made its way through the Federal Register.
Several key economic reports are due today and tomorrow along with big-name corporate earnings still on deck. Trade deficit data and Producer Price Index released today to show some concern in both fields. The U.S. trade deficit rose in March and reached $50 billion, increasing by 1.5%, while Producer Price Index data for the month of April rose slightly. Look for Core CPI and Federal Budget reports tomorrow. In earnings news, Roku saw shares spike after they released earnings yesterday evening which topped expectations and increased their forecasted revenue for the second quarter. Disney released after the market closed yesterday, and saw earnings top expectations with shares initially rising, although today find themselves slightly in the red. Duke Energy released their earnings before the market opened today and saw shares rise behind positive reports while Keurig-Dr. Pepper earnings also topped expectation, though shares are modestly trading lower today. Tomorrow’s earnings load is light while next week several big names are still due to report, including Nissan, Alibaba, Cisco, and Walmart.
Using the “^GSPC” symbol to analyze the S&P 500, our 10-day prediction window shows mostly negative signals. Today’s vector figure of +0.01% moves to -1.85% in five trading sessions. Prediction data is uploaded after the market close at 6pm, CST. Today’s data is based on market signals from the previous trading session.
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Our featured ETF for Friday is iPath S&P 500 VIX (VXX). VXX is showing a confident vector trend in our Stock Forecast Toolbox’s 10-day forecast.
The ETF is trading at $30.97 at the time of publication, up 1.00% from the open with a +1.55% vector figure.
Prediction data is uploaded after market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.
Note: The Vector column calculates the change of the Forecasted Average Price for the next trading session relative to the average of actual prices for the last trading session. The column shows expected average price movement “Up or Down”, in percent. Trend traders should trade along the predicted direction of the Vector. The higher the value of the Vector the higher its momentum.
West Texas Intermediate for June delivery (CLM9) is priced at $61.73 per barrel, down 0.61% from the open, at the time of publication.
Looking at USO, a crude oil tracker, our 10-day prediction model shows negative signals. The fund is trading at $12.83 at the time of publication. Vector figures show -0.41% today, which turns -4.64% in five trading sessions. Prediction data is uploaded after market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.
The price for June gold (GCM9) is up 0.30% at $1,285.20 at the time of publication.
Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows mostly positive signals. The gold proxy is trading at $121.3. Vector signals show -0.20% for today. Prediction data is uploaded after market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.
The yield on the 10-year Treasury note is down 1.04% at 2.46% at the time of publication. The yield on the 30-year Treasury note is down 0.35% at 2.88% at the time of publication.
Using the iShares 20+ Year Treasury Bond ETF (TLT) as a proxy for bond prices in our Stock Forecast Tool, we see positive signals in our 10-day prediction window. Today’s vector of +0.01% moves to +1.00% in three sessions. Prediction data is uploaded after market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.
The CBOE Volatility Index (^VIX) is down 1.29% at $19.15 at the time of publication, and our 10-day prediction window shows mostly negative signals. The predicted close for tomorrow is $16.27 with a vector of -15.91%. Prediction data is uploaded after market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.