Stock markets took a big step back this week as trade concerns and a rout in technology stocks turned investor sentiment negative. Facebook’s admission that user information was gained without permission and used in the 2016 election was a blow to the tech giants. The Fed raised short-term rates as expected but expressed less clarity on the hikes to follow this year. On Thursday, President Trump announced potential tariffs on up to $60 billion of Chinese imports to which China sent a measured response and warning. As the markets digested this news as well as more White House turnover, uncertainty about a potential veto of the spending bill – which was later signed – sent stocks lower.
Global stocks dived across the board this week with U.S. large-cap stocks taking the greatest hit – down nearly 6% on the week and nearly 3% year-to-date. In addition to the hits on technology stocks, the milder outlook on interest rates hurt the stocks of large domestic banks. International stocks weathered the storm slightly better, but still ended up in mostly negative territory for 2018 as well. With a small decline in longer-term interest rates this week, intermediate bond funds provided some shelter with slightly positive returns. Publicly traded real estate funds, however, felt the sting of both higher borrowing rates and a less stable equity market.