Stocks have pulled back sharply since Thursday on fears about rising trade tensions between the U.S. and China, and many local stocks, too, have been affected.
The Dow Jones Industrial Average and the S&P 500 are down more than 5% since Thursday, and some local companies have declined even more. However, some large local companies, including Humana and Yum Brands, have bucked the trend and actually posted gains since Thursday.
The Dow fell nearly 1,000 points Monday before recovering slightly and closing down 767 points, or 2.9%. The index has lost nearly 1,500 points in the last five days, down 5.5%. The S&P fell 5.8% during that span.
“It’s a combination of factors pushing equities lower,” said Derek Bonifer, portfolio manager at Louisville-based ARGI Financial Group.
“The Federal Reserve reduced rates last week, but dampened expectations about future rate cuts,” Bonifer told Insider via email. “This was followed by President Trump’s decision to place tariffs on additional Chinese imports and China’s response late last night allowing its currency to continue to devalue.”
Markets were rattled Thursday when President Donald Trump said he would impose another 10% tariffs on $300 billion more of Chinese goods in September. China’s response to devalue its currency makes its exports cheaper and hurts U.S. exporters, further fueling Trump’s ire.
“A few weeks ago markets were feeling optimistic the U.S. and China were resuming trade talks,” Bonifer said, “but this morning they appear as far as ever from striking a deal.”
“This is also a week light on economic data and very few speeches by Federal Reserve officials,” he said. “Both can sometimes serve as a calming effect and refocus markets when things turn volatile.”
Brett Corbin, a financial adviser with The Corbin Financial Group of Raymond James, agreed that the trade war is partially to blame and has prompted some “panic selling.”
However, Corbin said that some economic measures recently also “have been showing a slowing pace. This generates fears of recession and erodes confidence.”
He told Insider via email that investors would do well to stick to an investment plan that “lays out objectives over 1-3 years, not a news cycle. As difficult as it may be to ignore some of this day to day news, investors are likely better served by a disciplined adherence to their financial plan.”
Shares of Apellis Pharmaceuticals have fallen more than 12% in the last week, while tobacco products maker Turning Point Brands has seen its stock lose nearly 10% of its value. Shares of most other Louisville-based companies, including Papa John’s, Brown-Forman and Churchill Downs, have fallen between 6% and 3%. Texas Roadhouse shares are down 1.9%. Stock Yards Bancorp is off 2.5%.
ARGI’s BlackSwan ETF, which helps investors avoid some of the impact of a market slide, has fallen just 1.5% in the last five trading days. And Limestone Bancorp and Yum! Brands have recorded slight gains in the last week. Humana shares have jumped 2%.
Humana shares have been propped up by a better-than-expected second-quarter report. The Louisville-based insurer said Wednesday that it gained more customers in the quarter than at any time in the last decade and that it expects earnings to be higher than previously expected.
Local manufacturer Sypris Solutions had seen its shares rise to $1.12 early Monday before plunging. The closing price, 88 cents, meant a decline of 20% for the day. The company has been in danger of being delisted from the Nasdaq because of its low share price, which had bottomed at 71 cents. Shares had rallied, however, since mid-July, before Monday’s drop.
Despite Monday’s pullback, shares of almost all Louisville-based companies are still up for the year, and many by a large margin. Shares of Churchill Downs and Turning Point Brands, for example, are still up more than 40% this year. Yum is up more than 25%. Brown-F0rman is up nearly 12%.
UPDATE: This post has been update with the latest share price data and comments from Corbin.