The Market Bull – May 24, 2019
The major averages closed the week with small gains despite disappointing economic data and an unstable geopolitical backdrop. Since Monday the Standard and Poors 500 Index is down 16 points or .6% while the NASDAQ has lost 77 points or 1%.
Durable Goods Orders fell 2.1% in April, on broad based weakness. The proxy for business spending non-defense capital goods ex aircraft fell 5%, a second large decline in the last 3-months. A volatile series it has shown little growth for over a year now, and I doubt a full-blown trade war will help any.
With defaults and delinquencies on the rise for credit cards, heavily indebted American Consumers are struggling to make their car payments as well. The excessive debt levels are also starting to put a real crimp in new car sales pushing inventories up to the point that manufacturers are starting to cut production per a research piece by Merrill Lynch. The report went on to note that auto production fell 2.5% in April, a second decline in the last 3-months. These production declines are expected to shave .2% from Gross Domestic Product or GDP, while reducing employment as well. The next few months will be very telling as the effects of the trade war become known. Given that the economic data was already softening and that 2nd quarter GDP estimates are struggling to stay above 2%, risks to the downside are growing.
Standard and Poors 500 Index closed at: 2,826.06 up 3.82
NASDAQ finished the day: 7,637.01 up 8.73
Gold ended trading at: $1,284.30 down $1.10