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  • Writer's pictureKevin Hurley

Marketbites: Nasdaq Snaps Eight-Week Winning Streak


Portfolio Manager Commentary:

Stocks fell Friday, with Wall Street posting a losing week as a rally that carried the broader market in recent months appeared to run out of steam. All three major averages broke multiweek winning streaks. The S&P 500 lost more than 1% since the start of the week, ending five consecutive weeks of gains. The Nasdaq is also down more than 1%, snapping an eight-week win streak and post its worst weekly performance since March.

“Investors are definitely exhibiting the renewed fears of a US recession, as well as a global recession,” said AXS Investments CEO Greg Bassuk. “Inflation levels remain elevated and Federal Reserve policy definitely remains the investor narrative.”

The pullback was broad-based with more than 370 S&P 500 stocks trading in negative territory. Information technology was among the biggest laggards, down more than 1%. Notably, shares of Nvidia, a major AI beneficiary, were down 1.9%.

Chart of the Day:

China has many sources of geopolitical leverage, from its military to its vast market. Potentially, the most potent and least appreciated is the choke-point position it has built in global supply chains. China accounts for nearly a fifth of the world’s manufactured exports, up from less than 5% in 2000. It accounts for 66% of lithium-ion cells, used in electric-vehicle batteries; half the materials in windmills; 86% of all rare-earth minerals; and 77% of drones, according to the European Union, and more than 80% of solar-panel manufacturing, according to the International Energy Agency. Beijing is a key supplier of active pharmaceutical ingredients used in drugs, purified neon used to fabricate semiconductors and the dyes used in medical imaging.

Western companies source countless manufactured inputs in China. Group of Seven countries imported $1.2 billion in aircraft parts from there in 2018, including inputs to foreign airliners, according to a report released Thursday by the Atlantic Council and Rhodium Group. While mostly low-tech, those inputs can be difficult to replace on short notice, the report said. These choke points are powerful levers with which Beijing could deter or retaliate against the West, for example, in a flare-up over Taiwan.

Source: WSJ

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