The Dow Jones Industrial Average Will Keep Sliding as Trade War Damage Is Realized

Garrett Baldwin

The Dow Jones Industrial Average is struggling to bounce back from a 450-point loss on Wednesday. But the mainstream financial crowds don't seem to notice how the downturn is a direct impact of a U.S.-China trade war.

Manufacturing and consumer spending are down. And a trade deal might be the only thing to get us out of the rut. I'll talk more about this below.

First, here are the numbers from Wednesday for the Dow, S&P 500, and Nasdaq:

Now, here's a closer look at today's Money Morning insight, the most important market events, and stocks to watch.

The Top Stock Market Stories for Thursday

• Let's start with a hard truth. To me, the trade war between the United States and China is clearly impacting manufacturing output and consumer confidence. But a lot of the media are choosing to ignore it – particularly the mainstream financial crowd on the trading floor. There is a habit to ignore the big economic problems until they fall directly into our laps. Market confidence has turned sour given the 800-point decline we've witnessed since Tuesday. Even though U.S. and Chinese officials are meeting in a week to discuss trade, the damage is being seen. It's affected business planning, consumer spending, and broader macroeconomic issues. It will be very difficult to re-inspire confidence on Main Street heading into 2020.

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• While the markets need a trade deal to instill confidence, the United States is going in the opposite direction. The White House is now planning to hit Europe with 10% tariffs on Airbus planes and 25% on items like cheese, French wine, and Irish whiskey – because it's just possible Washington is trying to punish me with the latter? Europe has said it will likely swing back at the U.S. with additional tariffs. And this will only drive more uncertainty in the market. Moody's Analytics said Wednesday that one-fifth of the U.S. economy – shipping, manufacturing, and farming – is now in a recession. Trump has attempted to blame Democrats' impeachment efforts for the sell-off.
• Trade is the topic of the day, so we'll conclude the top stories with an update on the replacement treaty for the North American Free Trade Agreement. Speaker of the House Nancy Pelosi said that despite the ongoing impeachment probe, the House is making progress on the USMCA. With that said, Pelosi said that Democrats are seeking better assurances on certain issues before proceeding with the deal. "We want to be sure that as we go forward, we are strengthening America's working families and our farmers who are very affected by this," Pelosi said during a news conference.

Stock to Watch Today: FEYE, TSLA, COST, ASNA, EROS, STZ

• Shares of FireEye Inc. (NASDAQ: FEYE) are in focus on news that the cybersecurity firm has hired Goldman Sachs Group Inc. (NYSE: GS) to help it find a buyer. Reports indicate that discussions are still early. However, the most likely buyer is expected to be a private equity firm. Shares of FEYE stock added 4.5% on the rumors Wednesday and an additional 1.5% after Reuters confirmed the story after the bell.
• Shares of Tesla Inc. (NASDAQ: TSLA) were off more than 4.5% this morning after the auto company fell short of Wall Street earnings expectations. Despite reporting a record 97,000 vehicles during the third quarter, investors weren't very pleased. CEO Elon Musk had predicted 400,000 vehicles for the year. The company will need to close the remaining gap by manufacturing and delivering about 105,000 vehicles this quarter.
• Look for earnings reports from Costco Wholesale Corp. (NASDAQ: COST), Ascena Retail Group Inc. (NASDAQ: ASNA), Eros International Plc. (NASDAQ: EROS), PepsiCo Inc. (NYSE: PEP), and Constellation Brands Inc. (NYSE: STZ).

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Garrett Baldwin

About the Author

Browse Garrett's articles | View Garrett's research services

Garrett Baldwin is a globally recognized research economist, financial writer, and consultant with degrees from Northwestern, Johns Hopkins, Purdue, and Indiana University. He is a seasoned financial and political risk analyst, with a focus on stocks, hedge funds, private equity, blockchain, and housing policy. He has conducted risk assessment projects for clients in 27 countries, and consulted on policy and financial operations for some of the nation's largest financial institutions, including a $1.5 trillion credit fund, a $43 billion credit and auto loan giant, as well as two of the largest Wall Street banks by assets under management.

Garrett joined Money Map Press as an economist and researcher in 2011, specializing in alternative strategies with an emphasis on fundamental and technical analysis.

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