U.S.-China trade tensions have ratcheted up again following President Trump’s decision to level tariffs on the remaining $300 billion of U.S. imports from China. Combine that with China’s decision to let its currency (the yuan) weaken past the 7 per dollar level, and investors may be more concerned than ever that global tensions could drag down the economy and stocks.

From July 26 through August 5’s close, the S&P 500 Index lost 6%. Even though stocks have rebounded the past few days, we remain several percentage points off the highs. While heightened volatility may be here to stay, technical analysis sugges

The Treasury yield curve is plunging further into inversion, the point at which long-term yields fall below short-term yields.

As shown in the LPL Chart of the Day, Yield Curve Plunges Further Into Inversion, points on the yield curve are nearing alarming levels. The spread between the 3-month and 10-year Treasury yields fell to -31 basis points (-0.31%), approaching the -50 basis points (-0.5%) threshold that has been predictive of recession within a year. At the same time, the spread between the 2-year and 10-year yields has dropped to 11 basis points (0.11%), closing in on inverted territory for the first time this cycle.

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We’re a week into August, and trade tensions have been the biggest driver of U.S. stocks, as we predicted in our latest Weekly Market Commentary. Markets don’t like uncertainty, and we are getting a heavy dose of it now.

On August 5, the S&P 500 Index notched its worst day of the year amid President Trump’s decision to level tariffs on the remaining $300 billion of U.S. imports from China. China retaliated by letting its currency (the yuan) weaken beyond the 7 per dollar mark that many had viewed as a line in the sand, as shown in the LPL Chart of the Day, Chinese Currency Move Escalates Trade Dispute. Then,

U.S. stocks have hit another trade-induced summer storm.

The S&P 500 Index fell 3% on Monday, its worst day since December 2018. The index is now about 6% from record highs in U.S. stocks’ worst bout of volatility since May.

As shown in the LPL Chart of the Day, Storms Happen Often in U.S. Stocks, stock volatility this year has been relatively subdued compared to history. The S&P 500 has declined an average of 14% from peak to trough since 1990, and even in positive years, the index has dropped an average of 11% during the year.

“Though the volatility has been uncomforta