Market Insights 5/13/2019

U.S. equities finished solidly in the red, near the lows of the day and adding to last week’s tumble that marked the largest fall of 2019, as trade tensions between U.S. and China intensified with China retaliating with tariffs on U.S. goods after Friday’s increased duties on Chinese goods by the U.S.

Treasury yields were lower and the U.S. dollar was nearly unchanged amid a dormant economic calendar, while gold jumped and crude oil prices reversed course to trade lower despite heightened geopolitical worries.

The Markets…

The Dow Jones Industrial Average tumbled 617 points (2.4%) to 25,325

The S&P 500 Index fell 70 points (2.4%) to 2,812

The Nasdaq Composite plunged 270 points (3.4%) to 7,647

In heavy volume, 931 million shares were traded on the NYSE and 2.4 billion shares changed hands on the Nasdaq

WTI crude oil lost $0.62 to $61.04 per barrel and wholesale gasoline was $0.03 lower at $1.96 per gallon

The Bloomberg gold spot price increased $13.44 to $1,299.49 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was unchanged at 97.33

Treasury yields fall as economic calendar is quiet and trade concerns fester

Treasuries rallied, as the yield on the 2-year note fell 7 basis points to 2.17%, the yield on the 10-year note dropped 5 bps to 2.40%, and the 30-year bond rate decreased 4 bps to 2.83%. The stock markets extended last week’s drop, which was the largest of 2019 for the S&P 500, amid escalated trade tensions and uncertainty after the U.S. on Friday increased tariffs on Chinese goods and U.S.-China talks ended without a deal.

The markets looked for signs of when the next round of talks will begin, while digesting the retaliatory measures announced by China, which plans to increase tariffs on U.S. goods.

Europe and Asia lower as trade uneasiness festers

European equities finished lower, as the global markets extended last week’s drop that came amid heightened trade tensions between the U.S. and China after talks ended on Friday without a deal and the U.S. increased tariffs on Chinese goods. The markets added to today’s drop after China announced plans to retaliate with tariffs on U.S. goods after the Asian markets closed on Monday.

The euro fell and the British pound was little changed versus the U.S. dollar, and bond yields in the region were mixed. The economic calendar was subdued, but a read on French industry sentiment slipped surprisingly for April.

Stocks in Asia finished lower, adding to last week’s drop, as trade worries and uncertainty regarding the U.S. and China continued to hamper the markets after last week’s talks ended without a deal and as the U.S. increased tariffs on Chinese goods. The markets awaited any retaliatory measures from China, which had not been announced during the Asian trading session.

Chinese equities fell, and stocks in Japan moved lower, with the yen gaining ground. Markets in South Korea and Australia fell, as did securities listed in India, with the latter mulling a report that showed the nation’s industrial production unexpectedly declined in March. The Hong Kong markets were closed for a holiday.