Noisy Trade War News Adds Volatility To S&P 500 In Week 1 Of April 2018

Volatility was once again the name of the game in the U.S. stock market during the first week of April 2018. Starting from Friday, 30 March 2018's closing value of 2,640.87, the S&P 500 bounced off an intraday low of 2,553.80 on Monday, 2 April 2018 before going on to rise as high as an intraday high of 2,672.08 on Thursday, 5 April 2018 - a swing of 4.4% from low of the week to high of the week - before dropping 85.8 points on Friday, 6 April 2018 to hit an intraday low of 2,586.27 before rebounding a bit to close the week at 2,604.47.

Which is to say that there was quite a lot of noise in the U.S. stock market during the week that was, but not so much as to deviate from generally following our dividend futures-based model's projected trajectory associated with investors being largely focused on the distant future quarter of 2019-Q1 in setting today's stock prices.

Picking up from our analysis of our model's performance last week, we confirm that our model's projections are slightly overshooting the actual trajectory of the daily closing price of the S&P 500 as expected, but not by so much that we need to develop a red-zone forecast - we're going to let our standard model's forecast ride, with the understanding that it is likely to overshoot the actual trajectory of stock prices through 23 April 2018, and that the continuing elevated level of volatility in stock prices may exceed the "typical" level of volatility that we've built into our model's forecasts.

Here are the headlines that caught our attention as being noteworthy for their market-moving potential, where the noise being generated by the developing trade war between the U.S. and China would appear to be a leading contributor to the elevated level of volatility in the U.S. stock market.

Monday, 2 April 2018

• Oil falls 2 percent on Russia output rise, potential Saudi price cut
• China hits U.S. goods with tariffs as 'sparks' of trade war fly
• Trump to unveil China tariff list this week, targeting tech goods
• Wall Street tumbles on tech sector, trade war worries
  • Amazon shares fall 6 percent as Trump renews attack
  • Tesla shares fall on worries about Model 3 production rate
  • Intel shares see biggest drop in 2 years after report Apple will ditch Mac chips

Tuesday, 3 April 2018

• Oil edges higher with Wall Street, Brent well below $70
• Trade Wars:
  • U.S. escalates China trade showdown with tariffs on $50 billion in imports
  • U.S. seeks China trade moves on autos, financials, chips: source
  • China's premier pledges market opening in bid to avert U.S. trade war
• Fed's Brainard sticks to 'gradual' U.S. rate-hike plan
• Wall Street closes higher as S&P rises above key support level
  • Stocks rally on Amazon's rebound, dollar gains

Wednesday, 4 April 2018

• Oil down slightly; U.S. inventory draw offsets trade war fears
• Trade Wars:
  • China to impose tariffs on soybeans, autos among 106 U.S. products
  • China deploys soybeans in trade war, but may hit own foot
  • Trump says 'we are not in a trade war with China': tweet
  • U.S. Commerce chief Ross: trade talks likely with China
  • U.S. escalates China trade showdown with tariffs on $50 billion in imports
  • Trump economic adviser Kudlow predicts positive news on NAFTA
  • China, holding Treasuries, keeps 'nuclear option' in U.S. trade war
• Fed's Bullard repeats view that interest rate is close to 'neutral'
• Wall Street closes higher as China tariff fears ease

Thursday, 5 April 2018

• Oil climbs with equities, Saudi Arabia hikes crude prices
• Trump economic adviser says U.S., China trade deal likely - Fox Business
• Trade Wars:
  • U.S. trade deficit rises to near nine-and-half-year high
  • Trump proposes $100 billion more in tariffs on China, cites IP
• Dollar, stocks climb in relief rally over trade spat

Friday, 6 April 2018

• Oil inches down on Trump's latest China trade threats
  • Texas oil output surge clogs pipelines, depresses prices
• Wall Street falls 2 percent following remarks by Fed's Powell
  • Fed's Powell points to rate hikes, uncertainty on trade tensions
  • Fed's Powell: Too early to say how tariffs would affect U.S. economic outlook
• Trump threatens more China tariffs, Beijing ready to hit back
• Wall Street ends down 2 percent as U.S.-China trade fears intensify

This week, Barry Ritholtz found 5 positives and 7 negatives for the U.S. economy and markets in Week 1 of April 2018, but one of the negatives was that it's April and there is still snow in the weather forecast for a large portion of the U.S.!