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Weekly Winning Streak Ends as Trade Visit Cut Short

The trade conflict reared its frustrating head again on Friday and ruined the market’s chance for a fourth straight week of gains.

Mid-level meetings between U.S. and Chinese negotiators ended sooner than expected, which included cancelling a trip to meet U.S. farmers.

Sentiment between the two sides had been rather positive since late last month when they agreed to re-start negotiations in early October. Part of today’s lower-level meetings was to plan for such a summit.

Though there was no reason the trip was cut short, the market took it as a negative and moved lower.

The NASDAQ slipped 0.80% (or about 65 points) to 8117.67 and was off by 0.7% for the week.

The Dow dropped 0.59% (or nearly 160 points) to 26,935.07 and the S&P dipped 0.49% to 2992.07. These indices were down 1% and 0.5%, respectively, for the week.

Heading into the session, each of the indices were in striking distance of closing the week higher again. However, the trade news brought an end to that, along with all the craziness that comes from a quadruple witching day.

This week was mostly about the Fed, though, which cut interest rates by another quarter point on Wednesday as was widely expected. However, the market didn’t have much of a reaction to it.

Though this is starting to sound like a broken record, the major indices remain close to their all-time highs. That’s especially true for the S&P, which is only about 1% away from making history.

The market seems pretty comfortable at the moment just below new records. What’s it going to take to break through? A good trade deal would certainly do it, but no one is going to hold their breath waiting for that.

But stocks have been susceptible to the news for a while now (as proven yet again today), so a few encouraging headlines and solid economic data could be enough to keep the ball rolling until a trade deal or the next earnings season comes.

Today's Portfolio Highlights: 

Value Investor: "We're in a strange time of the quarter now when there is no Fed meeting and few earnings reports. The economic data is also sparse so stocks aren't moving on much of anything. Instead, they trade on rumors, headlines and tweets. You know how that is: anything can roil the markets and likely will.

"Despite the angst in the stock market in August and the great rotation we saw out of some of the growth stocks into value, which has now, I'm sad to say, ended, the S&P 500 is still less than 1% away from its all time high.

"But which group will provide the leadership to truly push stocks back into a breakout?

"I feel that a resumption of the bull market rally, in earnest, isn't going to happen until the trade war is resolved. It's having too big of an impact, especially on the industrial economy, to ignore now. It's the elephant in the room.

"Right now, Wall Street is in "wait and see" mode."
-- Tracey Ryniec

Counterstrike: "There is no explanation as to why they left early and as of this writing, I saw no details. But in a shoot first and ask questions later market, we saw a quick move lower. The China headlines are nothing new, but I think the reaction was ridiculous.

"The was some positive news out today that nobody seemed to care about. The New York Fed raised their Q3 GDP forecast to 2.2% from 1.6% and Q$ to 2.0% from 1.1%. The positive momentum is great news and means no recession in the first half of 2020.

"I wouldn’t pay much attention to today's action as it is influenced by all the options that expired today. Next week will give us a better feel and I think we could see all-time highs once again."
-- Jeremy Mullin

Have a Great Weekend,
Jim Giaquinto

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