Jobs Take Center Stage Today, Additional Tariffs Increase Odds For More Rate Cuts

Plus New Zacks Strong Buys for Friday, August 2 Profit from the Pros Jobs Take Center Stage Today, Additional Tariffs Increase Odds For More Rate Cuts Stocks pulled back yesterday on news that the WH will put tariffs on an additional $300 billion of Chinese goods. The markets were rebounding sharply earlier in the day, as traders rightly decided that the Fed's rate cut and commentary, Wednesday afternoon, were indeed bullish. Why there was any confusion was beyond me. But traders cheered the rate cut. And there's already a 60% chance that the Fed will cut rates yet again in September. But news that President Trump will be putting tariffs on an additional $300 billion of Chinese goods on September 1st, sent stocks lower. These additional tariffs were supposed to go into effect at the end of June. But those were postponed ahead of his meeting with President Xi at the G20 summit. Trade talks resumed earlier this week in Shanghai. And while they were considered constructive, there was no new breakthrough. And talks won't pick up again until September. But with China slow-walking the continued negotiations, and concerns they may be stalling until the next election, the WH moved to counteract that. Although, none of this should come as any surprise. The President said he would do this if he wasn't happy with the progress or pace. While this could very well be a negotiating tactic, only to suspend them ahead of the next meeting, nobody doubts that the administration will impose them if necessary. So what does this mean for the economy and the markets? Quite frankly, not that much really. For one, no new tariffs are going on until September 1st at the earliest. In the meantime, our economy is strong. The markets continue to trade near their highs. And the outlooks for both look strong as well. And they should. It's been estimated that the first round of U.S. tariffs on $200 billion of Chinese goods, and the Chinese tariffs on $60 billion of U.S. goods, would only shave two tenths to three tenths of a percent off of our GDP. Although, it would likely knock a half percent off of China's. That number will climb to four tenths to a half percent off of our GDP if/when the U.S. levies tariffs on the additional $300 billion. And that would likely shave more than one full percentage point off of China's GDP. But with our GDP at 2.6%, we're starting from a great place. And it would take a lot more than a half percentage point reduction to hurt this economy. In fact, we'd still be growing at a faster pace than the first 8 years of this recovery, and faster than the average annual GDP of this whole expansion. Let's be clear. Both countries want a deal. And it could be argued that China wants/needs a deal more than the U.S. But it's clearly going to take a little more time. Regardless, the numbers show the U.S. will be just fine. And for what it's worth, this dramatically increases the likelihood that the Fed will cut rates again in September. They cited global growth and trade concerns for the recent rate cut. And this new threat of additional tariffs only strengthens the case to cut rates again. But traders will shift their focus from trade to jobs this morning with the release of the Employment Situation report. The consensus is calling for 151,000 new jobs (160,000 from the private sector, and -9,000 from the public). And the unemployment rate is expected to tick down from 3.7% to 3.6%. Who knows what the report will say and what the market will do on any given day. But the economy's underlying fundamentals are strong. And the Fed remains committed to ensuring the expansion continues. And that's good news for the economy and stocks. Best, Kevin Matras Executive Vice President, Zacks Investment Research Sponsor [Top Tech Stocks to See Today]( Technology is being developed and embraced at blinding speed. A small number of innovative companies are creating the world of tomorrow and appear poised for exceptional growth. Zacks is targeting maximum profits from these stocks with the potential to generate triple-digit long-term gains. You're invited to see these exclusive recommendations. Special opportunity ends midnight August 4. [See Stocks Now]( Most Popular Articles from Zacks.com [Fed Announces First Rate Cut Since 2008: 5 Picks]( Rate-sensitive stocks likely to gain from the recent cut are real estate investment trusts (REITs) and utility stocks. [Read More »]( [Silicon Valley Stocks to Buy as Tech Juggernaut Rolls On]( The Technology sector of the S&P 500 has risen more than 30% year-to-date, making it the best-performing sector. [Read More »]( [Passenger Revenues Buoy Airline Industry's Near-Term Outlook]( Despite nagging headwinds like U.S.-China trade tensions, near-term prospects of the industry appear rosy due to uptick in passenger revenues. [Read More »]( [5 Top-Performing Dividend Aristocrats to Buy in August]( In order to safeguard your portfolio, investing in these stocks provides higher total returns with lower volatility. [Read More »]( [Spread Trade #5 - The Straddle]( Trading calls and puts at the same time is a bet on both actual and implied volatility. [Read More »]( Sponsor [Increase Investment Returns with Free Zacks' Portfolio Tracker]( Follow your investments easily in one place. Get free email updates that alert you to major events affecting your stocks and funds, including timely recommendation changes, earnings announcements and, most importantly, earnings estimate revisions. [Click to Learn More>>]( [Bull of the Day: Garmin (GRMN)]( CEO Clifton Pemble has driven this company to solid levels of profitability through savvy acquisitions and strong organic growth. [Read More »]( [New Zacks Strong Buys for August 2nd]( Here are 5 stocks added to the Zacks Rank #1 (Strong Buy) List today. [Read More »]( [Customize Your Profit from the Pros Delivery]( Download our app for convenient on-the-go access to even more—daily and weekly newsletters published by Zacks experts, proprietary research and tools, and Portfolio Tracker on Zacks.com. [Download our Zacks App for Apple iOS]( [Download our Zacks App for Android]( Visit [Success Stories]( to hear how Zacks research, tools and portfolios help our members outperform the market. Get all of our market insights and much more when you connect with us. [Visit Zacks on Facebook]( [Follow Zacks on Twitter]( [See Zacks videos on YouTube]( [Join Zacks on LinkedIn]( [Read Zacks Commentary on StockTwits]( This free resource is being sent by [Zacks.com](. We look for investment resources and inform you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. [www.zacks.com/disclaimer](. Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research is not a licensed securities dealer, broker or US investment adviser or investment bank. The Zacks #1 Rank Performance covers the period beginning on January 1, 1988 through June 3, 2019. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank #1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit [( for information about the performance numbers displayed above. Zacks Emails If you would prefer to not receive future profit-producing emails from [Zacks.com]( the primary purpose of which is the commercial advertisement or promotion of a commercial product or service, then please [click here]( and confirm your request. If you have trouble with the unsubscribe link, please email support@zacks.com. Zacks Investment Research 10 S. Riverside Plaza, Suite 1600 Chicago, IL 60606