It’s been a while since I’ve written about the stock market. Let’s see how things are standing at the moment.
First and most important, the Dow Jones is still down 6% from recent highs. Since the beginning of the year, it’s up about half a percent. This is a stark difference from the growth we were seeing in 2017. Only in May have we begun to barely see gains for the year, save the brief bull momentum in January. This is not good for short-term investors, but it provides a great buying opportunity for long-term investors. This correction is just that: a correction. Other economic factors have been great this year, and even company earnings have beaten expectations. There is nothing that currently points to a long-term recession, even with the trade talks about China. That leads me to my next point.
Talks of a possible “trade war” with China led the market to lose over 10% from its high. Trump initially proposed tariffs for steel globally, but later exempted nearly everyone except for China. Trump then tweeted that trade wars were ‘easy to win,’ sparking major market moves. Since then, these talks have cooled off, and the trade war has been put ‘on hold.’ However, the possibility of a trade war always looms in the market, ready to come out whenever Trump may feel.
In addition to trade war talks, there were also talks of and even a planned meeting with North Korean dictator Kim Jong Un. When it became known that North Korea and the US were talking, the markets went up. When a meeting was scheduled, the markets seemed to begin a new bull trend. That ended earlier in the week when the Trump-Kim meeting was cancelled and Trump boasted about the US’s military power. In a letter to Kim Jong Un, he wrote, “You talk about nuclear capabilities, but ours are so massive and powerful that I pray to God they will never have to be used.” This caused the Dow Jones to drop 1% in intraday trading.
Finally, despite international worries, earnings have been great this quarter. Large companies such as Apple, Disney, Google, and Amazon are all beating EPS, and many companies are raising dividends. This points to a great economy overall that just isn’t accurately portrayed in the Dow Jones at this time.
That’s all for this quick look. I’ll be writing quick looks monthly, and I will write more in depth articles throughout the coming months.
Pictured: Secretary of State Mike Pompeo meets with Kim Jong Un.