S&P 500 posts worst week of 2019 amid trade tensions

Updated Fri, May 10, 2019, 2:21 PM

Stocks recovered some losses Friday after Treasury Secretary Steven Mnuchin called trade talks with China this week “constructive.” The upbeat comments helped ease concerns after President Donald Trump’s new tariffs on Chinese-made goods went into effect early Friday morning, escalating fears of a full-blown trade war.

However, the S&P 500 still posted its worst week of 2019 after a rout earlier in the week cut into gains.

The S&P 500 (^GSPC) rose 0.37%, or 10.68 points, on Friday as of market close. The Dow (^DJI) rose 0.44%, or 114.01 points, after being down as many as 358 points earlier during the session. The Nasdaq (^IXIC) edged up 0.08%, or 6.35 points.

The S&P 500 ended the week lower by 2.18%, the biggest drop since the week ending December 21. The Nasdaq also posted its largest drop since before Christmas, with the index down 3.03% for the week. The Dow fell 2.12% for the week, or the largest drop since the seven days ending March 8.

Overnight, the Trump administration raised its 10% tariff on $200 billion worth of Chinese imports to 25%, as Trump had promised earlier this week. However, the additional levies will not apply to imports currently in transit – meaning the actual impact of tariffs won’t be felt for several more weeks.

The escalation on levies after a five-month trade ceasefire is speculated to have been a tactic to extract further concessions from Beijing, which has vowed to retaliate. The Chinese delegation reportedly reneged on a swathe of major sticking points central to the working trade deal late last week.

Stocks overseas were higher despite the higher tariffs, with markets in both Asia and Europe mostly in the green to rebound from losses earlier this week. In the U.S., stocks pointed to a shallower selloff as investors hoped the trade dispute would be resolved sooner rather than later. On Thursday, the Dow had been off as many as 450 points at the lows of the day before clawing back some of those losses.

Trade delegations from both the U.S. and China continued with meetings in Washington, D.C., on Friday. However, most observers believe a near-term trade deal is off the table for the time being.

Trump, for his part, said Thursday that he received a “beautiful letter” from Chinese President Xi Jinping, and that he believed it was still possible to reach a deal this week.

Uber offering

Uber’s stock began trading Friday on the New York Stock Exchange, under the ticker “UBER.” The offering gave retail investors their first opportunity to buy shares of the ride-hailing market’s leader.

Shares opened at $42.00 each, down 6.7% from the initial public offering price. Earlier Friday morning, shares had indicated that they would open at a price as high as $48.00 per share. As the hours rolled on, however, indications began to slide lower.

By the end of the trading day, Uber shares closed at $41.60.

On Thursday, Uber priced its initial public offering at $45 per share, at the low end of its targeted range of between $44 and $50 per share. That had implied a market valuation of about $82.4 billion on a fully diluted basis. However, it was down sharply from the as much as $120 billion valuation reportedly floated earlier as the company sought a public listing.

Within the first 10 minutes of Uber’s first trade, retail investors executed more trades than in Lyft’s first two and a half hours as a publicly traded company, according to data from TD Ameritrade. At that point, Uber trades comprised 7.8% of total equity trades on the platform – a percentage which grew to 10.3% by the end of the session.

Arguably, Uber’s offering has been the most hotly anticipated of this year’s wave of major tech IPOs.

However, the company’s public listing has been victim to poor timing, as it comes on the heels of Lyft’s disappointing public debut and a sudden stock market rout that’s sent the S&P 500 down 2.5% so far this week alone. Each of these factors was speculated to have driven Uber’s IPO pricing to the low end of its stated range.

With shares down 25% from its IPO price, Lyft’s inaugural public performance has widely been viewed as a flop. Other newly minted public tech companies, however, have fared much better.

Pinterest’s (PINS) stock had risen 51% from its IPO price, and Zoom Technologies’ stock (ZM) more than doubled. Each hit the public markets in April. Beyond Meat (BYND) has outperformed, with shares up 173% from its IPO price earlier in May.

Earlier this year, major tech listings were put on hold after a 35-day partial government shutdown left agencies responsible for IPO documentation approval largely inactive. The result was a drought of new initial public offerings in the first quarter, while the S&P 500 posted its best three-month start to the year in more than two decades.