HA – Key Economic Events That Moved the Markets in May 2019

S&P 500 Index Daily Chart from May 1 to May 31, 2019

May 1

  • FOMC: interest rates remain unchanged, though Fed policy may not have been as dovish as the market had expected.
  • Stocks sold off into the close after Fed Chair Powell hinted that a lower fed funds rate may not be imminent.

May 2

  • Initial jobless claims came in at 230,000 in the week ending April 27–analysts were expecting only 215,000 new claims.
  • Markets fell despite corporate earnings turning out better than expected with 75% of the companies beating earnings estimates so far.

May 3

  • S. indices advanced upon release of the April employment report.
  • 263,000 new jobs were created in April when only 180,000 new jobs were expected.
  • The unemployment rate fell to to 3.6%, a 49-year low, which slightly beat expectations of 3.8%.
  • The average worker’ wage increased by 6 cents to $27.77 an hour.

May 6

  • Indices fell when President Trump threatened to ramp-up U.S. tariffs on $200 billion in Chinese goods.
  • But markets quickly recovered upon hearing from the Chinese Foreign Ministry that a Chinese delegation is still planning to travel to the U.S. for trade discussions.

May 7

  • With the worst sell-off in months, the US-China trade war remains the market’s primary focus.
  • President Trump’s tariff is scheduled to go into effect at 12:01 a.m. on Friday, according to US Trade Rep Robert Lighthizer.
  • Job openings rose 4.8 percent in the month to 7.4 million while hires fell 0.6 percent to 5.6million.

May 8

  • Markets fell upon hearing confirmation that the Trump administration will proceed in its plans to increase tariffs on $200 billion of Chinese goods to 25% from 10% on Friday.
  • Despite the markets’ failure to recoup, index activity appears to be a minor pullback as compared with yesterday’s plunge.

May 9

  • Indices opened lower as President Trump tweeted that the trade deal with China is in serious danger.
  • US jobless claims last week came in at 228,000; economists were expecting 220,000 new claims.
  • Producer price index were slightly lower than expected, increasing 0.2%.
  • Overall, the markets in the short-term have become highly politically sensitive, driven by geopolitical sentiment rather than economic fundamentals.

May 10

  • Stocks started the day in a plunge as President Trump mentioned that he was in no rush to finalize a trade agreement with China, as negotiators from both countries prepared to continue talks in Washington.
  • CPI increased 0.3% in April, which compares to expectations of a 0.4% gain.
  • Despite the initial decline, markets rose to close above yesterday’s high.

May 13

  • Indices fell sharply as trade tensions between the US and China appeared to have worsened.
  • Beijing announced plans to retaliate against the US by placing new levies on $60 billion in U.S. goods on June 1.

May 14

  • As market sentiment has been driven significantly by President Trump’s tweets, markets rose as Trump said that he believed discussions with China will be very successful, with the outcome anticipated in three or four weeks.
  • President Trump announced that he will be meeting Chinese President Xi Jinping next month at the June 28-29 Group of 20 summit.
  • The small business optimism index came in at 103.5, beating economist expectations of 4.
  • S. import prices in April increased 0.2% from the previous month, much smaller than the 0.6% gain that economists had predicted.

May 15

  • Markets bounced back as investors bought back into tech stocks while trade war news slowed.
  • Treasury Secretary Steven Mnuchin also announced that he would fly to Beijing to resume trade talks.
  • US retail sales fell 0.2% in April as economists predicted a 0.2% increase.
  • Retail sales in April increased 7.2% from a year earlier.
  • Industrial production fell 0.5% in April, which compares to expectations of unchanged at 0.0%.

May 16

  • Three major US economic reports came in stronger than expected.
  • Housing starts came in strong at 1.235 million beating an expected 200 million.
  • Residential building permits were 1.296 million, beating estimates of 1.290 million.
  • The May Philadelphia Federal Reserve business outlook survey came in at 16.6 when only 9.3 was expected.
  • Initial jobless claims were 212,000 in the week ended May 11; economists had expected 220,000 new claims.

May 17

  • Indices broke their 3-day winning streak as China announced that its planned $60 billion tariffs on US products will go into effect on June 1, prompting the Trump administration to proceed with tariffs on $300 billion worth of Chinese goods.
  • Despite tariffs, consumer expectations jumped to a much stronger-than-expected 102.4, well above the 97.5 expectations.

May 20

  • The US-China trade war opened up on a new front when the US government’s punishment of Chinese tech giant Huawei and Google’s move away from the company caused fears concerning the sale of semiconductors and smart phones in China.

May 21

  • Markets recovered as investors set aside the trade war jolt for the moment and re-entered the markets.
  • The existing home sales report came in at 5.190 million, below the 5.350 million consensus expectation.

May 22

  • Markets wobbled but barely moved as investors weigh the trade policy stalemate against the benefits of the current low interest rate environment.
  • Today’s slide was relieved as the FOMC minutes revealed that the Fed was prepared to hold interest rates steady for an extended period of time, reinforcing market consensus on a “hands-off” Fed, at least for the remainder of the year.

May 23

  • Markets plunged as investor weighs toward the notion that the trade war will be extended, hitting the economy a lot harder than it did a few weeks back.
  • US and China appear to have dug into their positions, making the tech sector a new battleground.
  • Analysts are expecting both US corporate profits and, on a larger scale the global economy, to be impacted by the escalating trade war.

May 24

  • Indices opened slightly higher due to a better tone to the US-China trade dispute.
  • President Trump repeated that he would meet with China’s President Xi in June at the G-20 meeting, slightly boosting slight investor sentiment.
  • Durable goods order in April fell 2.1% from the prior month. Economists had expected a 2.0% drop.

May 28

  • Markets plunged as drops in bond yields cast doubt on global growth prospects.
  • Consumer confidence came in at a higher-than-expected 134.1, above the 129.9 consensus expectation.

May 29

  • US indices are lower, as tensions between the US and China exacerbated fears about a global economic slowdown.
  • There are reports that China could be prepared to restrict exports of rare-earth elements in retaliation for U.S. tariffs.

May 30

  • Markets are slightly higher after President Trump today said the US-China trade talks were doing well and that China is willing to make a deal with Washington.
  • The G-20 summit in Japan later in June might provide the markets with relief, as both the US and China could use it to continue their trade negotiations.
  • The US GDP in the first quarter grew at a 3.1% on an annual pace. Economists expected first quarter GDP to be revised down to 3%.
  • Initial jobless claims came in at a consensus 215,000; claims increased by 3,000.

May 31

  • Markets are lower as President Trump threatens new tariffs on Mexican imports on June 10,which would increase every month up to as high as 25% by October 1, if Mexico failed to stem the flow of immigrants entering the U.S.
  • Dow drops more than 350 points.
  • The S&P 500 slid 1.3% to 2,752.06.
  • The Nasdaq Composite dropped 1.5% 7,453.15.

Karl Montevirgen

Market Strategist | Halifax America

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