US equity markets just recorded their worst week of the year. Barring May 10, the S&P 500 (SPY) saw downward price action every day last week. The markets were down sharply on May 10 but finally managed to close marginally in the green.
The SPDR S&P 500 ETF is now down 2.0% in May, while the Invesco QQQ ETF (QQQ) is down 2.4%.
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Last week’s sell-off was driven by President Donald Trump’s surprise announcement that the United States would increase tariffs on $200 billion worth of Chinese goods. The president made the announcement last weekend and went ahead with the tariff hike on May 10. The tariffs were increased even as US-China talks were underway. Last year, both the United States and China also imposed tariffs on each other’s goods as talks were underway.
Last week, Activision Blizzard (ATVI) fell 2.4%, while GameStop (GME) saw downward price action of 5.4%. Electronic Arts (EA) and Take-Two Interactive Software (TTWO) saw upward price action of 1.5% and 1.7%, respectively. Gaming stocks are having a somber year, and most companies are underperforming the broader markets.
YTD (year-to-date) price action, Take-Two Interactive and Activision Blizzard are trading flat for the year. GameStop has fallen more than 30% this year. Last month, GameStop fell to multimonth lows after lowering its guidance. Electronic Arts is outperforming other gaming stocks by a wide margin. The stock is up 19% YTD.
Activision Blizzard (ATVI) released its first-quarter earnings results after the markets closed on May 2.
In the last month the CSI 300 is down 11.5%, much more than US indices.
JCPenney (JCP) is slated to announce its results for the first quarter of fiscal 2019, which ended on May 4, on May 21.
The key point of contention in the US-China trade dispute is the large trade deficit the United States runs against China.
On May 16, the Labor Department reported jobless claims for last week. Initial jobless claims fell by 16,000 to 212,000 for the week ended May 11.
Jeffrey Gundlach recommended investors take advantage of the volatility in interest rates at the recent Sohn Conference.
Tesla (TSLA) has fallen 4.2% as of 11:55 AM EDT on May 17. While US equity markets opened in the red today, they've recouped their losses.