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Market recap week ending 5/10/19

-Darren Leavitt, CFA

Markets had their worst week of the year due to concerns regarding the US-China trade negotiations.  The week started with steep declines after President Trump indicated that tariffs on 200 billion in goods would increase to 25% from 10% if a deal could not be struck.  Additionally, the President indicated that tariffs would be imposed on 300 billion goods in the coming months if an agreement cannot be reached.  Markets traded throughout the week with huge intraday swings as investors waited for some resolution.

China’s trade delegation was in Washington late in the week, and the dialogue was described as constructive, but no deal would be had. Increased tariffs were imposed on Friday evening.  For the week, the S&P 500 lost 2.18%, the Dow dropped 2.19%, the Russell 2000 shed 2.54%, and the NASDAQ decreased by 3.03%.  Investors sought safe-haven US Treasuries and sent the 2-year note yield down eight basis points to 2.24% and the 10-year bond yield down seven basis points to 2.46%.  Gold closed a bit higher on the week gaining ~$6 to close at 1287 an oz.  Despite increased tensions in the Middle East, Oil closed down slightly at $61.66 a barrel.  Uber, the “Unicorn” ridesharing company, came public last week with a dismal showing.  The company raised 8.1 billion, pricing 180 million shares at $45, giving the company a valuation of $82 billion.  The company broke issue (traded below its IPO price) right on the open which led to further declines and was one of the worst IPO’s that I can recall.  There were no changes to our models last week.

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