US Stocks Ended March 23, 2018

The S&P 500 Index slid nearly 6% last week and closed at the lowest level since February 8th, bringing the YTD return to -2.75%. Most of the negative movement can be credited to increasing odds of a global trade war. President Trump announced a plan to implement tariffs on nearly $60b of Chinese goods as punishment for China's lax enforcement U.S. intellectual property rights. In retaliation, China announced possible tariffs on over 128 imported U.S. goods. The result was a return of -4.7% for the Shanghai Shenzhen CSI 300 Index last week. If this trade war intensifies it could have significant impact on global financial markets. Europe was not immune from trade tariffs. The EU proposed a 3% protectionist revenue tax on large technology firms. This helped send European markets south as the STOXX 600 Index returned -3% last week. Facebook Inc. returned -13.9% last week, in part because of the proposal of the new EU tax, but even more importantly recent security concerns over their users' content. Facebook's CEO Mark Zuckerberg has apologized several ways for the company's "breach of trust" and vowed a change. Despite Facebook's dip, Oracle Corp. was the worst performer in the S&P 500 last week posting a -14.3% return. The software giant announced earnings well above analyst estimates, but missed 4Q revenue expectations and lowered their revenue forecasts. Google's parent Alphabet Inc. posted a -10.5% return last week, most of the blame can be attributed to EU's protectionist revenue tax. Not all stocks was negative last week. Several energy names were actually in the green, including EOG Resources Inc., Anadarko Petroleum Corp. and Conocophillips which were all up over 5%, fueled by higher oil prices. MuleSoft Inc. agreed to be acquired by Inc. in a cash and stock deal worth over $6.5b. Overall, we remain constructive on U.S. equities as GDP and job data, along with corporate earnings remain strong. While equities contain risks, over the long run those who buy and hold tend to be rewarded for owning them.
Posted on Monday, March 26, 2018 @ 8:11 AM

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.