Trump trade war: U.S. stock market is faring better than China's since dispute began

collected by :Molly Tony

Trump trade war: U.S. stock market is faring better than China's since dispute beganAdam Shell | USA TODAYAPEconomists say there are no winners in a trade war, and American farmers, appliance companies and automakers are proof that tariffs can inflict financial harm. But if you're using the stock market as a measure of who's winning the trade dispute, the U.S. has a clear lead over China and its other trading partners. The Standard & Poor's 500, a stock index filled with America's biggest companies that get more than 43 percent of their revenues from overseas sales, is up 6.1 percent this year. The major stock index in Japan is down a little less than 1 percent and European shares are up just 0.3 percent. If Trump wins concessions from China or the European Union, it could prove bullish for stocks as trade terms improve for U.S. companies.

FANG surge leads stock market recovery, putting Netflix in spotlight

Six of the S&P's 11 sectors remain in negative territory for the year, while the S&P 500 is up 4.8 percent, just 2.5 percent short of its January high. The S&P 500 tech index, which led last year with a 37-percent rise, is up more than 15 percent so far this year. S&P 500 companies are expected to post 20.9 percent earnings per share growth for the second quarter, according to Thomson Reuters data. Stock valuations are more reasonable now than back in January, with the S&P 500 price-to-earnings multiple at 16, roughly its five-year average. "They have the kind of top-line growth that is the envy of the rest of the companies in the S&P 500."

The fate of the stock market for 2018 could rest on the next couple of days

as informed in New warnings about cuts to Social Security and Medicare are a reason to worryMarket ExtraThe fate of the stock market for 2018 could rest on the next couple of daysThe S&P 500 ETF sets a new milestoneThe fate of the stock market for this year may arguably hinge on how shares trade in the next couple of days. According to analysts at Bespoke Investment Group, if the market gains from April through July, stocks almost always finish out the year higher and despite Monday's weakness, it's looking good for the S&P 500 so far. "Barring an epic collapse in the last five trading days of the month, this will mark the fourth straight monthly gain for the S&P 500," said Paul Hickey, cofounder of Bespoke, in a note last week. Meanwhile, Ryan Detrick, senior market strategist at LPL Research, noted that the stock market tends to follow the path of the 10-year Treasury yield BX:TMUBMUSD10Y-1.31%"Two years ago this month, the 10-yr yield bottomed at 1.36%. During each of those periods, the S&P 500, too, has risen, he said.

When earnings are up, why are investors anticipating a stock market downturn?

One issue is that investors often think only very loosely about the distinction between earnings levels and growth rates. After a year of extraordinary profit growth such as 2017, it would be unrealistic to expect further acceleration. Emerging market profit growth this year should be very similar, in the mid-teens. The rally in shares last year was to a large degree driven by the anticipation of strong earnings growth to come. As a result, developed equity markets are now trading at just 15.5 times earnings over the next 12 months.

Traders debate how a trade war will affect the stock market

It's that "to date" part that has gotten a large part of the investor base considerably more nervous. This is a major issue that the market, up until today, has been completely neglecting."The commodity markets aren't neglecting the threat. Copper is down dramatically in the past month on concerns over a slowdown in China and an increase in trade tensions. The Fed said this a month ago (June 12 to 13) — a time when tariffs looked like only a remote possibility. What side of this debate do you think they will be on now that tariffs have become very real?