Sep. 3, 2019 – This week is already off to a poor start for stock traders. Major indices opened lower Monday morning on fresh concerns about the trade war with China and then went lower after some weak economic data.
This morning’s ISM Manufacturing report wasn’t just below expectations, it also showed the manufacturing sector in the U.S. is in contraction. It is too early to tell is this is a bad month or a sign that manufacturing has rolled over. It should also be noted that in the same way that many products are only, or at least mostly, produced offshore, other products are manufactured primarily in the U.S, so a slowdown in the global economy potentially results in lower demand for products made in the U.S.
Turning to the trade war, new tariffs went into effect over the weekend, which was expected, but even as President Trump continues to insist that progress is being made, negotiators are having trouble scheduling talks that were expected to take place this month, which doesn’t seem like a problem two sides that are close to deal would have.
Meanwhile, those of us old enough to remember back to three weeks ago, when falling stocks was blamed on falling bond yields, will be interested to note that yields on longer Treasuries are at new lows. The spread between two-year and ten-year Treasuries uninverted today after being negative for most of last week. It may go upside-down again as the two remain very close.
Looking forward, more downside surprises in economic data seems like the biggest chance for a big swing in markets this week. A upside surprise is possible, but we thing the size of the move on a negative surprise would be bigger.
Economic Events this Week
This morning’s ISM Manufacturing Index missed expectations and showed the manufacturing sector is in contraction. It seems unlikely the Non-Manufacturing Index will show a contraction on Thursday, that report and factory orders both have the potential to move markets, particularly with a downside surprise.
- 10:00 a.m. – ISM Manufacturing Index
- 8:15 a.m. – ADP Employment Change
- 10:00 a.m. – Factory Orders
- 10:00 a.m. – ISM Non-Manufacturing Index
- 11:00 a.m. – EIA Crude Oil Inventories
- 8:30 a.m. – Nonfarm Payrolls
- 8:30 a.m. – Avg. Hourly Earnings
- 8:30 a.m. – Unemployment Rate
- 8:30 a.m. – Average Workweek
Earnings Reports this Week
A pretty quiet week on the earnings calendar.
- Before the bell: None
- After the bell: COUP, HQY
- Before the bell: AEO, NAV
- After the bell: PANW, CPRT, WORK, MDB, DT
- Before the bell: CIEN, DCI, LVGO, JW.A
- After the bell: ZM, LULU, CRWD, DOCU
- Before the bell: BRC
Strong Sectors past Month
These sectors are up 5% or more in the last 20 trading days:
- Gold Miners
- Junior Gold Miners
Weak sectors past month
These sectors are down 5% or more in the last 20 trading days:
- Oil Services
- Oil & Gas Exploration
- Regional Banking
- Metals & Mining
Strong sectors past five trading days
These sectors are up more than 3% in the last five days.
- Oil Services
Weak sectors past five trading days
These sectors are down more than 3% in the last five days.