Stocks took a big hit Monday, as inflation fears reignited following word that President Trump will move ahead with plans for 25% tariffs on goods imported from Canada and Mexico beginning today. The tariffs are reportedly due to unsatisfactory responses regarding the continued flow of the deadly opioid fentanyl into the United States via the two countries. Furthermore, there will be an additional 10% tariff imposed on products from China, on top of the 10% levy from last month.
Stocks in Asia followed the U.S.’s lead, closing mostly down, and markets in Europe were also showing losses. Meanwhile, U.S. stock futures were indicating a continuation of yesterday’s decline at the start of today’s trading.
The economic docket for this week includes a number of key reports. Tomorrow we will hear from ADP with its Nonfarm Employment Report for February. Analysts are calling for the release to show an increase of 144,000 positions, down from the 183,000 added the month before. In addition, the Institute for Supply Management is due to release its non-manufacturing (services) Purchasing Managers Index (PMI) for last month. The consensus is calling for a reading of 53.0, versus the 52.8 reported in January. If the projections are close to the mark, it would mean an eighth-straight month of growth for the service economy. (Readings above 50 indicate expansion, while those below 50 denote contraction.)
On Thursday, the Department of Labor will release its report on initial jobless claims. Consensus estimates are looking for a slight downtick, to 236,000, compared to 242,000 the week before.
Friday brings additional data points on the health of the labor economy, with the Bureau of Labor Statistics report on nonfarm payrolls for February. The consensus is calling for an increase of 156,000 positions, up from the 143,000 recorded in January. Also, the unemployment rate and average hourly earnings are expected to hold steady at 4.0% and 4.1%, respectively. That same day, the Federal Reserve is scheduled to release its semiannual Monetary Policy Report to Congress, which will be accompanied by testimony from Fed Chair Jerome Powell. As it stands, Fed funds futures are suggesting that there won’t be any rate cuts until June, at the earliest.
Summing up Monday’s price moves for the major indexes, the Dow Jones Industrials lost 649 points, or 1.5%, the S&P 500 fell 104 points (1.8%), and the tech-laden NASDAQ fared the worst of the lot, losing 497 points (2.6%). – Mario Ferro
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
CLICK HERE for more information on our services or call 1-800-VALUELINE (1-800-825-8354). Our account managers are available Monday through Friday, 8:00 AM to 6:00 PM Eastern Time.
