Market weakness from breakdown in US/China trade talks
US equity markets are experiencing increased volatility and overall weakness as talks between the US and China on a future trade deal unraveled on Thursday, May 9, ultimately leading to increased US tariffs on an additional $200 billion of goods on Friday the 10th, and China retaliating Monday the 13th on $60 billion of additional US goods.
New market highs
Markets had been very strong in 2019 based on what was believed to be good progress toward a trade deal with China. Through Friday, May 10th, the S&P 500 was +15.77%. We actually hit new all-time highs in the S&P 500 on April 30, 2019.
Corporate earnings provide silver lining
Wall Street strategists came into 2019 with the expectation that corporate earnings would weaken substantially, with estimates for 1Q19 at down 5% year-over-year. As of May 10, 2019, roughly 75% of companies in the S&P 500 have reported 1Q19 earnings and 75% of those companies surprised to the upside. S&P 500 earnings in 1Q19 are now trending to positive +1% growth.
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