The week Trump drove the stock market nuts: Here's a play-by-play of how trade was with China wreaked havoc and erased $ 1.4 trillion in market value
Evan Vucci / AP
- The US stock market entered the week high, but saw its strong start to 2019 thrown into disarray as Donald Trump reignited his trade war with China.
- The benchmark S&P 500 lost 2.2% in its worst week of the year, while roughly $ 1.4 trillion was based on global stock indexes at one point.
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They say all good things must come Equities entered Monday riding high after a historically strong start to 201[ads1]9. But by the time Friday afternoon rolled around, they'd suffered through their worst week of the year. As of Thursday's close, the MSCI All-World World Index has already seen $ 1.4 trillion or market value.
But that summary hardly does justice to the turbulence felt along the way, which frayed investor nerves and led many to wonder if this was the beginning of the end for the 10-year bull market
The rocky week actually kicked off last Sunday, because before regular-hours trading began, after President Donald Trump used his notorious Twitter fingers to rekindle the trade war between the US and China
The president said he was planning to increase tariffs on $ 200 billion of Chinese goods to 25% from 10% and slap fresh tariffs on an additional $ 325 billion worth.
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The investors and equity indexes saw fewer days ago at both incrementally positive and negative developments. After almost recovering from Monday's close-up, the benchmark S&P 500 then finished Tuesday 1.7% lower – the third-largest daily decline of the year. Those losses grew across Wednesday and Thursday, then continued into Friday. Then, finally, Treasury Secretary Steven Mnuchin agrees with the bleeding with a single word: "constructive" – said in reference to the US-China trade talks.
The US and China may not have struck a final trade accord in the end, But that was all investors needed to hear to shift back into buying fashion. The S&P 500 was relegated from earlier on Friday and finished 0.4% higher.
But considerable damage was already done. With a 2.2% loss over five days, the S&P 500 ended up suffering through its worst week of 2019. Stock indexes around the world took a similar beating. Here's a roundup of the damage:
Read more : This under-the-radar trade can help you beat the market as a tariff tensions flare – even if stocks are getting crushed
But The stock market's wild week is not yet acknowledged by the conditions that left it so vulnerable in the first place.
Prior to Trump's Sunday tweetstorm, the US equity market was priced to perfection. That meant strong corporate earnings growth, an accommodative Federal Reserve, and a positive trade-war outcome were all baked into record levels. With so much viewed as going right, any minor tremor was bound to have a major impact.
What's perhaps most intriguing about Trump's escalation of the trade conflict is that it left him open for blame in the almost certain event of a stock-market sell-off. After all, throughout his presidency, he's regularly taken credit for the market's successes, and placed blame on others – usually the Fed – for its failures.
In the end, perhaps it was always Trump's plan to have Mnuchin fly in the 11th hour to all corporate groups. But the road he took to get there was long and winding. At this point, only one thing is certain: Investors around the world will be watching intently for signs of his next move
Rebecca Ungarino, Theron Mohamed, and Jonathan Garber contributed reporting
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