Welcome to Markets on Monday, where we preview what’s going on in the stock market this week.
Investors may be in for another bumpy ride this week. The S&P 500 fell more than 2% in early trading Monday. That’s after it fell 2.2% over the course of last week, marking its worst week since December.
What’s behind the drop? Despite two days of talks last week between the U.S. and China, there’s still no trade deal—instead, both the U.S. and China have increased tariffs on imports from the other country. Uncertainty surrounding trade negotiations could continue to rattle investors until there’s a resolution.
But experts say it’s important to maintain perspective and remember your long-term goals. That will help you avoid making impulsive moves you’ll regret.
Beyond trade, investors will get some insight into how American consumers are doing this week, thanks to reports coming in from both the government and individual companies.
Investors hate surprises, and while they knew the U.S. had planned trade talks for this month, there’s still no deal with China. As J.J. Kinahan, chief market strategist at TD Ameritrade, told Grow last week: “We’re watching the sausage being made.”
Trade tensions are escalating. Last week, the U.S. increased tariffs on Friday from 10% to 25% on $200 billion of Chinese products. On Monday, China retaliated, saying it will raise tariffs on $60 billion of U.S. goods on June 1. Even though both Trump and Treasury Secretary Steven Mnuchin called the two-day meetings with China leaders “constructive,” Trump has since said in a tweet that China “backed out” of a deal.
Until there’s a final deal, the stock market appears poised for continued bumpiness. And you can expect to pay more for Chinese goods—a study published earlier this year estimated the new 25% tariff could cost the average American family of four more than $750 each year.
Investors will get a peek this week into the habits of the American consumer: how confident people are feeling and if they’re spending more money or less. That information is important because consumer spending accounts for more than two-thirds of U.S. economic activity.
Earnings season—the multiweek period when publicly traded companies report results on their business for the prior quarter—is wrapping up. But this week, we’ll hear from retailers like Walmart, Macy’s, and Ralph Lauren about their first-quarter results.
On Wednesday, expect the Commerce Department to release the retail sales report for April. This monthly report tracks spending on things like clothing, autos, and gasoline. In March, retail sales surged 1.6%, the fastest pace since 2017.
Finally, on Friday investors will see the results of the University of Michigan’s monthly survey about consumer confidence—that is, how optimistic people feel about the overall economy and their own personal finances. A different reading showed consumer confidence weakened in March.
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