S&P 500 Expected To Respond To U.S – China Trade Talks This Week

S&P 500 Expected To Respond To U.S – China Trade Talks This Week

The ongoing events and consequent uncertainty linked with the U.S – China trade war has kept the stock market indices under pressure for the past few weeks. In the last week alone, the S&P 500 index dropped by 0.3% while a more significant 0.9% drop was reported in the Dow Jones Industrial Average index. Ahead of August 2019, the indices have experienced an extended 3-week losing streak.

Wall Street’s Poor Performance Linked To Poor Data For U.S Economy

The data for the U.S economy wasn’t up to a good start either in the last week. The disappointing figures further added to the pressure confronted by the stock market indices. Following the release of manufacturing data report, analysts and financial experts from all over the world were leaning more towards a greater risk of an imminent recession in the United States of America.

The manufacturing activity report was released by the Institute of Supply Management on Tuesday, October 1st, 2019. It was highlighted in the report that the manufacturing index has dropped to its lowest level in over a decade. Dow Jones index responded with a major fall of 800 points in the next two days.

U.S – China trade war has gone through multiple phases of complications over the past year with both the parties imposing punitive tariffs on the other’s products. The last month has, however, hinted towards a humbler tone circling the trade war. Mr. Larry Kudlow in his capacity as a senior economic advisor for White House was reported to have said on Friday that the next week may bring a few positive surprises for traders and investors.

U.S And China To Hold Negotiations This Week

With officials from the U.S and China agreeing to hold negotiations on Thursday and Friday, it is being anticipated that the upcoming week will give some life to the S&P 500 index and rally it up to the previous levels.

But that’s not all that is expected to significantly affect the S&P 500 index in the upcoming week. Traders will also be interested in the FOMC meeting minutes being released by the Federal Reserve on Wednesday, October 9th, 2019. The Federal Reserve has implemented the rate-cut strategy two times this year already. As per the financial experts, the meeting minutes will give clarity to the Fed’s stance, i-e, is there sufficient data to support rate-cut for the third time this year or not?

In either case, information extracted from the meeting minutes will surely manifest itself as higher volatility in the major financial markets across the globe. All in all, analysts are expecting the Dow Jones and S&P 500 indices to try and regain the losses of the last week.   

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