The Strength of the Market is: Strong

Stocks ended last week lower after President Trump threatened higher tariffs on China, accusing the country of “becoming very hostile” with its restrictions on rare earth metals, which are a key resource for the technology and defense industries. Prior to Trump’s comments, stocks were much higher, with the Nasdaq hitting a new all-time high. The setback with China came as the U.S. government shutdown dragged into its 10th day with the Senate failing for a 7th time to pass funding proposals. There seem to be no signs that Republicans and Democrats have made meaningful progress on negotiations. Last week, the S&P 500, Dow Jones and Nasdaq were all down more than 1%. In addition, late-Friday afternoon, President Trump said the United States would impose new tariffs of 100% on imports from China “over and above any tariff that they are currently paying,” starting on Nov. 1, and that the U.S. would also impose export controls on “any and all critical software.” 

Economic reports from last week came back mixed:

•Consumer Credit - lower than expectation

•Consumer Sentiment - higher than expectation

•Jobless Claims - unreported due to government shutdown

This week, investors will look for guidance from economic reports like Small Business Optimism, Manufacturing, Inflation, Retail Sales, Housing, and Jobless Claims.