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The 1% Market Move: 11/19/2018

The Bottom Line
  •  S&P 500 down –1.82%
  • Stoxx Europe 600 down –1.14%
  • Shanghai Composite Index down –2.13%
So What Happened?

Global stocks had a case of the Mondays, most notably in the U.S. and Europe where markets were down –1.66% and –0.73%, respectively. Today’s results appear to be driven by further discord over U.S. and Chinese trade. As we cautioned last week, the market has become very sensitive to any updates on the trade war.

In fact, just four days ago we reported the S&P 500 gained +1.06% on the heels of supposedly cooling tensions between the world’s two largest economies. The excitement was short-lived, however, as news reached the U.S. that a weekend summit between world leaders in Papua New Guinea had turned sour. U.S. officials further pleaded their case in front of 21 world leaders labeling Chinese trade practices as predatory, while Chinese officials lambasted the $250 billion of tariffs the U.S. has slapped on Chinese goods. The lack of concession on either side has Wall Street worried this month’s highly-anticipated meeting between Chinese President Xi Jinping and President Trump will end in a stalemate, providing no end in sight to the ongoing trade war.

These concerns trickled down to the U.S. stock market as widespread declines in technology companies dragged down the overall market today. Specifically, the tech-heavy NASDAQ index closed down -3.03% on concerns that the trade war will curb global demand and disrupt supply chains. With today’s retreat the tech sector has now crossed into “correction” territory (greater than a -10% decline) over the past three months. Despite the recent slump, the NASDAQ is still up +1.81% year-to-date. The S&P 500, on the other hand, is now essentially flat for the year at +0.64%.

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The S&P 500 is a market capitalization weighted index of 500 leading U.S. companies and one of the most common benchmarks for the broader U.S. equity markets.

The NASDAQ Composite Index measures all NASDAQ domestic and international based common type stocks listed on The Nasdaq Stock Market. Launched in 1971, the NASDAQ Composite Index is a broad based Index. Today, the Index includes over 3,000 securities, more than most other stock market indices. The NASDAQ Composite is calculated under a market capitalization weighted methodology index. To be eligible for inclusion in the Composite the security’s U.S. listing must be exclusively on the Nasdaq Stock Market (unless the security was dually listed on another U.S. market prior to January 1, 2004 and has continuously maintained such listing), and have a security type of either: American Depositary Receipts (ADRs); Common Stock; Limited Partnership Interests; Ordinary Shares; Real Estate Investment Trusts (REITs); Shares of Beneficial Interest (SBIs);
Tracking Stocks
Security types not included in the Index are closed-end funds, convertible debentures, exchange traded funds, preferred stocks, rights, warrants, units and other derivative securities.

If at any time a component security no longer meets the above eligibility criteria, the security is removed from the Composite Index.

The Stoxx Europe 600 is a subset of the STOXX Global 1800 Index. With a fixed number of 600 components, the STOXX Europe 600 Index represents large, mid and small capitalization companies across 17 countries of the European region: Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.

The Shanghai Composite Index is a market capitalization weighted index made up of all the A-share and B-shares that trade on the Shanghai Stock Exchange.

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