What happened
Shares of Whirlpool (WHR +0.73%) were climbing last month as the appliance manufacturer caught a tailwind from positive economic news, including improving trade relations and dovish statements from the Fed. Though there was little company-specific news out on Whirlpool during the month, the stock nonetheless finished June up 24% according to data from S&P Global Market Intelligence, as the manufacturer tends to be sensitive to macroeconomic news.
As you can see from the chart below, Whirlpool's rise came largely in tandem with the S&P 500.
So what
Whirlpool's best day of the month came on June 4, when markets soared on positive statements from China about trade negotiations and later on, comments from Federal Reserve Chief Jerome Powell. He said that the central bank was willing to lower interest rates as needed after the market had been shaken by two events in May: the collapse of trade talks with China and President Trump's threat to impose tariffs on Mexico in order to coerce that country to stop the influx of illegal immigrants into the U.S.
Image source: Getty Images.
As a result, the S&P 500 finished up more than 2% that day, and Whirlpool shares gained 7%. The company, which owns brands including Maytag and Kitchen-Aid in addition to its namesake, is particularly sensitive to tariffs and monetary policy because it benefits from a booming housing market, which leads to more appliance purchases. Whirlpool has been suffering from the steel and aluminum tariffs imposed by the Trump administration.
On June 18, the stock tacked on another 3% after President Trump said he planned to meet with Chinese President Xi at the G20 Summit in Japan at the end of the month.
Now what
Whirlpool offers a textbook example of how tariffs and trade policy can roil a stock. The company had initially seemed like a winner when the Trump administration imposed tariffs on washing machine imports, at Whirlpool's request, early last year. However, aluminum and steel tariffs have since forced the company to raise prices, and Korean rivals like Samsung and LG have now built factories inside the U.S. as a workaround for tariffs.
As a result, Whirlpool now seems on the losing end of the trade war, which explains why the stock reacted favorably to news of detente with China.
Though June was clearly a good month for the stock, shares have swung back and forth multiple times over the years as the news changed. Therefore, with the trade situation still in flux, investors shouldn't be overconfident that last month's gains will hold.
