Stocks reached record highs last week despite an escalating trade war. President Trump imposed $200 billion worth of tariffs on Chinese goods – although at a lower rate than expected – and China retaliated with tariffs on another $60 billion of U.S. goods. Tensions rose even further by Friday after the U.S. imposed economic sanctions on a Chinese military agency and its director over the purchase of Russian weapons.
Investors will be watching to see if President Trump will respond with further tariffs on China. In recent comments, he suggested potential tariffs on an additional $267 billion in Chinese goods, which would cover the value of all goods that the U.S. buys from China. These negative sentiments were somewhat offset by White House economic advisor Larry Kudlow, who left open the possibility of a negotiated solution to the trade dispute. (See also: US-China Trade Friction May Last 20 Years: Jack Ma.)
In addition to trade war concerns, investors will also be keeping a close eye on the Federal Reserve’s FOMC meeting on Tuesday and Wednesday, as well as gross domestic product data due out on Thursday. The unanimous consensus is that the central bank will hike interest rates by 25 basis points to a 2.00 to 2.25 percent range, thanks to a strong jobs market that’s starting to push inflation higher.
Coming off a week in which major U.S. indexes reached record highs, traders will monitor trade negotiations and news from the FOMC in the week ahead. …read more
Read more here: Economy Remains Strong, but Trade War Fears Loom
Category: SPY, DIA, IWM, QQQ