It was a wild week on Wall Street

Economic, political winds buffet stocks

By Jordan Valinsky, CNN Business
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Traders and financial professionals work at the opening bell on the floor of the New York Stock Exchange (NYSE), May 6, 2019, in New York City.

NEW YORK - It was far from the dog days of summer on Wall Street this past week. Investors went on a roller coaster ride after the markets reacted to both good and bad news.

 

Monday, August 12

 

The wild ride begins Monday after the Dow closes nearly 400 points lower, or 1.5%. The S&P 500 and Nasdaq also closes 1.2% lower.

The continuing trade war between China and the United States weighed heavily on investors' minds. The risk is that the tit-for-tat tariff battle between the world's two largest economies could turn the economic slowdown into a recession.

Money piles into gold and ultra-safe government bonds. The 10-year Treasury yield and 30-year Treasury yield starts to decline.

China-sensitive stocks, including Caterpillar, Deere, and Boeing all decline more than 1%.

 

Tuesday, August 13

 

Monday's losses are reversed, with the Dow spiking higher after the United States decides to delay some tariffs on Chinese goods.

The US Trade Representative postpones new tariffs on several categories of Chinese-made consumer goods until December 15. Those products include cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing.

Tech stocks are among the market's biggest winners. Apple surges 4% while chipmakers Nvidia and Intel are up about 3%.

The Dow close nearly 400 points higher, with the Nasdaq rising by 2% and the S&P up 1.5%.

 

Wednesday, August 14

 

At the risk of retriggering post-traumatic stress among investors, this is stocks' worst day of 2019.

The Dow immediately opened 400 points lower after the bond market flashes a warning signal that has an eerily accurate track record for predicting recession. It is the first time in over a decade it has done that.

Yields on 10-year US Treasury bonds dip below the yield on the US 2-year bond, both hovering around 1.58% in the late afternoon. When shorter-term rates are higher than longer-term bond yields, that is known as an inverted yield curve. The 3-month US Treasury already inverted versus the 10-year in the spring.

Losses accelerate throughout the day with the Dow closing 800 points lower, or 3%. The S&P 500 and the Nasdaq close down by similar margins.

Despite all the bearish news, analysts still don't expect the US to enter a recession this year given the economy's continuing strength. Unemployment is at historic lows, consumer spending is booming and the financial system is healthy.

William Foster, Moody's lead US analyst, predicts the US economy will avoid a recession in 2019 and in 2020, despite the yield curve inversion's warning sign. But he does expect growth to slow in the second half this year into 2020.

 

Thursday, August 15

 

Wednesday's freefall mercifully doesn't continue into Thursday. The Dow closes 100 points higher after Walmart reports strong earnings and China says it remains hopeful for a trade war resolution with the US.

General Electric, however, has its worst day in more than a decade. Its stock sinks 11% after an accounting investigator accuses the troubled company of financial fraud. GE strongly denies the allegations.

 

Friday, August 16

 

The Dow ends 307 points higher, or 1.2%. The S&P 500 rises 1.4% and the Nasdaq is up 1.7%. It was the third straight week of losses for the three major indexes, however.

US stocks rose after bond yields edged up and Europe and China signaled plans for additional stimulus to shore up their economies in the face of a global trade war. China's National Development and Reform Commission says it will boost stimulus to support the country's economy and stabilize employment.

--CNN Business' Victoria Cavaliere, Matt Egan, David Goldman and Paul R. La Monica contributed to this report.

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