Stocks Edge Higher Amidst Trump Trade Threat & Declining Volatility
new York, August 3, 2023 – U.S. stock markets posted modest gains Wednesday, continuing a positive trend despite a recent period of volatility and a newly issued warning from former President Donald Trump regarding potential trade repercussions for nations dealing with Russia. The S&P 500, Nasdaq, and Dow Jones Industrial Average all advanced, though gains remained tempered by ongoing economic data releases and upcoming earnings reports.
The S&P 500 closed up 0.4% on Wednesday, bringing its week-to-date gains to 1.7%.The tech-heavy Nasdaq Composite saw a stronger increase, rising 0.5% for the day and 2.5% for the week. The 30-stock Dow Jones Industrial Average climbed 0.3% on Wednesday, with a weekly gain of 1.4%. This follows a period of underperformance; prior to Wednesday, the S&P 500 had experienced losses in five of the previous six trading sessions, while the Dow had seen six negative days in the last seven.
Trump Issues Trade Warning Linked to Ukraine Conflict
The market’s movement comes as former President Trump threatened to impose trade penalties on countries that continue to trade with Russia unless a peace agreement with Ukraine is reached by September.The specific nature of these potential penalties remains unclear, but the announcement injected a new element of geopolitical risk into the market. This echoes past trade strategies employed during Trump’s presidency, notably the imposition of tariffs on goods from China beginning in 2018, which significantly impacted global markets.
volatility Cools After Tariff Concerns
Analysts note a significant decrease in market volatility in recent months.Kristian Kerr,head of macro strategy at LPL Financial,highlighted that volatility across major asset classes has fallen dramatically since early April,coinciding with a reduction in tariff-related anxieties. Specifically, one-month realized volatility in key indexes has dropped to levels not seen as June 2022. The CBOE volatility Index (VIX), often referred to as the “fear gauge,” currently sits around 13, well below its historical average.Economic Data & Earnings on Tap
Looking ahead, traders are focusing on key economic indicators scheduled for release on Thursday. These include the weekly jobless claims report,which provides insight into the health of the labor market,and data on unit labor costs and productivity for the second quarter. The Bureau of Labor Statistics will release the productivity and costs data at 8:30 AM ET.
Several major corporations are also reporting earnings this week. Before the market open,investors will be scrutinizing reports from pharmaceutical giant Eli Lilly (LLY),currently trading at approximately $565 per share,and media conglomerate Warner bros. Discovery (WBD), trading around $80 per share. After the market closes, Block (XYZ), formerly known as Square, trading around $65 per share, and Pinterest (PINS), currently valued at approximately $27 per share, will release their quarterly results. These earnings reports are expected to provide further clues about the overall health of the U.S. economy and corporate performance.Reporting contributed by CNBC’s Kevin Breuninger.
Additional Context & Details Not in Original Article:
VIX Level: The current VIX level (around 13) provides a concrete measure of market volatility.
Stock Prices: providing approximate current stock prices for the companies reporting earnings adds immediate value for investors.
BLS Release Time: Specifying the release time for the productivity and costs data (8:30 AM ET) is helpful for traders.
Historical tariff Context: Mentioning the 2018 tariffs on Chinese goods provides historical context for Trump’s trade threats.
definition of VIX: explaining the VIX as the “fear gauge” makes the article more accessible to a wider audience.
Geopolitical Risk: Explicitly labeling Trump’s threat as introducing “geopolitical risk” frames the situation for investors.
