Stocks Closed Lower Yesterday, But All Of The Major Indexes Are Currently Up For The Week Stocks closed lower yesterday, ending the 3-day advance for the big three indexes (Dow, S&P 500 and Nasdaq). But all of the major indexes are higher for the week, so far, including the small-cap Russell 2000 and the mid-cap S&P 400. After a heady 3 days of gains, it's not surprising to see some profit taking. We'll have to see if the market can get back on track and add to those gains today or at least in the near offing. There is a price gap on the daily charts for all of the majors. They don't have to be filled. But you can be sure plenty of technicians are looking at that. Tariff concerns, even though worries have been lessened lately (President Trump, just the other day, said that tariffs due in April would "probably be more lenient than reciprocal"), are still weighing on the market due to the uncertainty surrounding it all. Not to mention the sporadic comments by the administration that at times seem to undermine the narrative of moderation. That includes the recent "secondary tariffs" of 25% imposed on any country buying energy from Venezuela. And yesterday's announced 25% tariffs on imported autos. Plenty of business people are trying to lower the panic about tariffs (former Target and Toys "R" Us executive said, "I think this whole thing with the tariffs is grossly exaggerated," prices are "not going to go up 10 to 15 or 20%," and that "it's not nearly the magnitude of what they're talking about.") And that makes sense. Especially when you consider that imports account for roughly only 15% of GDP. Even adding in the multiplier effect of 1.5 (the theory is that for every $1 change in spending, GDP could change by $1.50 in the same direction), that's still only a modest drag on GDP, since that's applied to only a relatively small portion of our economic output. And that's assuming the worst. Spending is unlikely to drop commensurately. And there's also the substitution effect of people simply switching to domestic products. The fear is real. But the reality is likely to be far less worrisome. In other news, yesterday's MBA Mortgage Applications showed the Composite Index down by -2.0% w/w with Purchases up 0.7%, and Refi's down -5.3%. And the Durable Goods Orders report showed New Orders up 0.9% m/m vs. last month's 3.3% and views for -1.0%. Ex-Transportation it was up 0.7% vs. last month's 0.1% and estimates for 0.3%. And Core Capital Goods were off -0.3% vs. last month's 0.9%. Today we'll get the third and final look at Q4 GDP. Last month's estimate put it at 2.3%. The final revision today is calling for 2.4%. We'll also get Weekly Jobless Claims, the International Trade in Goods and Services report, Corporate Profits, Retail and Wholesale Inventories, the Pending Home Sales Index, and the Kansas City Fed Manufacturing Index. With two more day to go this week, all of the major indexes are currently in the green for the week. We've got a big inflation report to get thru tomorrow with the Personal Consumption Expenditures (PCE) index. The last several inflation reports (CPI – retail inflation, PPI – wholesale inflation, and the previous PCE report) all showed progress on inflation resuming. We'll see what the PCE says tomorrow. In the meantime, we've got today to get thru first. But if all goes well by week's end, that would make it the second up week in a row. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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