US Stock Markets Ended June 15, 2018

Stocks were mixed for the week due to increased trade tensions with China and a slightly more hawkish stance by the Federal Reserve. The Trump administration enacted $50 billion in tariffs on Chinese exports to the U.S. In response, China plans to charge a 25% tariff on roughly the same dollar amount of goods from the U.S. Investors also digested a widely-expected rate increase on Wednesday. However, in a less expected move, the Fed increased their forecast from three rate hikes to four total for 2018 due to an uptick in inflation and low unemployment. In economic news, retail sales increased by 0.8% in May, which beat the median expectation of 0.4%. In stock news, Tesla, Inc. gained after the company announced it would lay off 9% of its workforce, in an effort to reduce future cash burn and make good on Elon Musk's promise to earn a profit in the 2nd half of the fiscal year. A federal judge ruled in favor of AT&T Inc.'s planned acquisition of Time Warner Inc., rebuffing the Justice Department's assertion the deal would be anti-competitive for the TV industry. The deal had far-reaching implications as the ruling could lead to multiple mergers within paid TV. Comcast Corp. increased their unsolicited bid for Twenty-First Century Fox, Inc. assets as they try to out-bid Walt Disney Co. and convince the Twenty-First Century Fox, Inc. board the deal will pass regulatory hurdles. Despite potential headwinds from trade wars and higher rates, the U.S. economy looks to be on strong footing and in better shape than foreign peers.  While earnings season is nearly a month away, S&P 500 corporate profits are expected to show another strong quarter with nearly 20% EPS growth. Strong fundamentals have the potential to trump any increased geo-political risk or slight rise in risk premiums required by investors.
Posted on Monday, June 18, 2018 @ 8:39 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.