Dow drops 500 points as trade war fears return

11 April, 2018, 12:43 | Author: Gladys Mathis
  • Horizons S&P 500 Covered Call ETF (HSPX) Rises 1.6% for Apr 5

Earlier this week, the Trump administration announced plans for tariffs on $50 billion worth of Chinese goods in retaliation for China's alleged theft of USA intellectual property. US 10-year Treasury yield was last down 2.75 basis points at 2.76 percent, while gold prices went up more than 1 percent.

Bob Smith, president and chief investment officer at Sage Advisory Services Ltd Co in Austin, Texas, said the markets were going to react adversely to Trump's latest statement. The FTSE 100 in Britain lost 0.2 percent. The president's top economic adviser said the United States and China are holding "back-channel discussions" to resolve an escalating trade dispute that has unsettled global financial markets.

The Dow closed down 572 points, a drop of 2.3 percent after President Trump threatened to escalate a confrontation with China over trade.

The Dow fell 588 points, or 2.4 percent, at 23,909.

China levied 25 percent additional tariffs on USA goods earlier in the day.

Stocks dipped further after Trump criticized the World Trade Organization on Twitter Friday morning and the losses worsened in the afternoon.

"So the ability of the equity markets to push significantly lower is going to be limited", said John Brady, senior vice president at R.J.

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The U.S. Treasury puts the closing yield on the 10-year note at 2.77%.

"The process itself seems to be quite chaotic", she said.

Mnuchin said that a stock market correction was normal after such a long stretch of rising prices. Caterpillar and Boeing, industrial giants that rely on China, led the index's losses.

"I feel like this is a typical reaction, but I think that it will come back around", said Zach Holt.

The Dow average, which contains numerous multinational companies including industrial powerhouses Boeing and Caterpillar, swung dramatically this week, with nearly 1,300 points separating its lowest point Monday afternoon from its high late Thursday. While annual growth in average hourly earnings rose to 2.7 percent, it stayed below the 3 percent that economists estimate is needed to lift inflation toward the Federal Reserve's 2-percent target.

Craig Holke, investment strategy analyst for the Wells Fargo Investment Institute, said the market will continue to bounce around as investors worry about changes in trade that could slow down the global economy and company profits. Still, Pride said all of the proposed tariffs add up to a pretty small fraction of trade between the USA and China, and overall, they wouldn't affect the nation's economy that much if they do go into effect.

The S&P 500 lost 22.96 points, or 0.862237 per cent, to 2,639.88.

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