March 9, 2018 Market Outlook

Wall Street Expects to Book Gains

On the last trading session this week, the S&P 500 is posed to gain 1.8% while the Dow Jones is looking to rise 1.5%. The Nasdaq Composite is expected to set the week’s biggest gains, with a climb of 2.3%.

On Thursday, despite the signing of the steel and aluminum tariffs, the major benchmarks gained and reacted favorably to Trump’s decision to allow exceptions to some trade partners.

Meanwhile, Trump has yet to name a replacement for Gary Cohn, his chief economic adviser who announced his resignation. The major U.S. stock indexes closed lower on Tuesday over worries about a potential trade but Trump appeared to soften his stance on tariffs.

Aluminum and Steel Tariffs to Take Effect in 15 Days

As promised, U.S. President Donald Trump signed on Thursday the order to impose tariffs, 25% on imported steel and 10% on imported aluminum. Canada and Mexico are initially exempted as the U.S. works out better trade concessions from them in the ongoing NAFTA negotiations.

The tariffs are set to take effect in 15 days although Trump is open to grant exemptions to other trade partners that will change their trade policies to a friendlier stance towards the U.S. Trump hopes their foreign allies will accede to undertake “fresh” trade negotiations and give the U.S. favorable terms.

J.P. Morgan Co-President Warns of Major Stock Pullback

Daniel Pinto, Co-President of J.P. Morgan (JPM) said during his interview with Bloomberg Television on Thursday, “It could be between 20% to 40%, depending on the valuation.”

Pinto was referring to the U.S. stock market and the possibility of a 40% plunge in the next 2 to 3 years. He is certain there will be a deep correction. If his prediction comes true, the plunge would wipe out the recent gains for U.S. stocks. The Dow Jones and the S&P 500 rallied 45% and 38% respectively over the past two years.  

If Trump decides to expand the trade measures, not just on steel and aluminum, there’s a risk it could further rattle traders, Pinto added.

U.S. Labor Dept. to Release February Jobs Report

Investors are keenly awaiting the new data on wage growth. The U.S. Labor Department will release the February jobs report today.

Economists have estimated that about 200,000 jobs were added last month and that would equal the gains in January. The unemployment rate is also expected to slightly drop to only 4%, which would be a new 17-year low.

Worries over rising inflation and interest rates resurfaced after the January results showed the fastest U.S. wage growth since 2009. Stocks tumbled and caused the Dow Jones to drop 666 points.

Amazon Might Beat Apple to the $1 Trillion Mark

Amazon.com Inc. (AMZN) might beat Apple Inc. (AAPL) to the $1 trillion mark and become the world’s most valuable publicly listed company.

While AAPL rose by 24% over the past 12 months, coinciding the iPhone’s 10th anniversary, to a give it a market capitalization of $893 billion. However, Amazon, with more than the $752 billion market value, is closing the gap.

The shares of Amazon.com Inc. have surged by 83% over the past year, boosted by fast revenue growth as more customers shifted to online shopping and businesses transferred their computing operations to the cloud where Amazon Web Services leads the market.

Amazon will soon gain entry into healthcare as it is about to form a solid triumvirate with Berkshire Hathaway Inc. and JPMorgan Chase & Co. to cut health care costs. Amazon already dislodged Microsoft Corp as the No. 3 U.S. company by market capitalization.

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