Weak US construction spending data
On March 4, US equities opened on a positive note since the S&P 500 benchmark (SPY) started the day with 0.4% gains. By the end of the session, the 0.4% gains turned into 0.4% losses. Weaker-than-estimated US construction spending data for December hurt investors’ sentiments. According to data compiled by Thomson Reuters, economists expected a 0.2% rise in December construction spending, while the actual data reflected a fall of 0.6%. The data were much worse than an 0.8% rise in construction spending in November.
In the second half of 2018, concerns about China’s slowing economic growth started to take a toll on investors’ sentiments across the world. In the last six months, various economic data from the manufacturing and automobile sectors confirmed the weakness in China’s economy.
According to Reuters, “factory activity in China contracted to a three-year low” in February 2019. The report mentioned that the steepest fall in China’s export orders in a decade had a negative impact on China’s factory activity.
Apart from declining local demand, steep US tariffs on Chinese imports could be one of the key factors for China’s worse export orders.
According to data compiled by Marklines, China’s new vehicle sales fell 15.8% YoY (year-over-year) in January. China’s vehicle sales fell for the seventh consecutive month on a YoY basis.
During an interview with Fox News in December 2018, President Trump seemed happy to take the blame for the slowing Chinese economy. He said, “China’s economy, if it’s in trouble, it’s only in trouble because of me.”
US stock market
Weakness in China’s macroeconomic data is terrible for US stock investors. Many large US companies have raised their bets on China’s economy in the last few years. As of March 4, the S&P 500 Index and the NASDAQ Composite Index (QQQ) have risen 11.4% and 14.2%, respectively, YTD (year-to-date). General Motors (GM), General Electric (GE), Boeing (BA), Apple (AAPL), NVIDIA (NVDA), Amazon (AMZN), IBM (IBM), and Ford (F) have risen 17.3%, 42.6%, 34.2%, 11.5%, 17.4%, 12.9%, 21.8%, and 15.2%, respectively.
Southwest Airlines is going to start its first flight from Oakland to Honolulu on March 17.
Broadcom (AVGO) stock fell ~8.5% after markets closed yesterday following the semiconductor giant's fiscal 2019 second-quarter earnings release. It missed analysts' revenue estimate and cut its fiscal 2019 revenue guidance by $2 billion to $22.5 billion due to sluggishness in its semiconductor solutions business.
The SPDR Gold Shares ETF (GLD), which tracks physical gold prices, has underperformed the broader markets year-to-date, rising just 4.4% compared to the S&P 500’s (SPY) gain of 15.9% as of June 14. The sentiment for gold, however, has been turning around.
Safe havens such as Treasuries and gold were back in favor on June 14 as stocks fell due to rising tensions in the Middle East, concerns over growth, and the looming threat of the US-China trade war. The tech-heavy Nasdaq Composite Index fell 0.67% in the first hour of trading.
Lululemon (LULU) stock rose 2.1% on June 13 in reaction to better-than-expected first-quarter results and an upgraded outlook for fiscal 2019 overall. The company's first-quarter adjusted EPS grew 34.5% to $0.74 on revenue growth of 20.4% to $782.32 million. Analysts had expected EPS of $0.70 and revenue of $755.31 million. Here's why the outlook got an upgrade.
As of 4:40 AM Eastern Time today, US crude oil active futures were at $51.83, ~4% below their closing level in the previous week. If US crude oil prices stay at those levels today, they'll mark their third week of decline in five weeks.
Amazon is discontinuing its Amazon Restaurants service, which has been delivering food for restaurants in parts of the United States. Amazon Restaurants launched in the United States in 2015 and entered the British market the following year. However, it met strong opposition in the British market.