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Published: Tue, April 10, 2018
Economy | By Melissa Porter

Dow tumbles on trade war fears

Dow tumbles on trade war fears

"It doesn't surprise me that as the rhetoric heats up, the market is weak".

The Dow dropped nearly 600 points on Friday as the potential for a damaging trade dispute - which had begun to fade on Wednesday and early Thursday as other top White House advisers tried to calm the markets as statements by Mr. Trump, Mr. Mnuchin and Robert Lighthizer, the United States trade representative, stirred up the sentiment that the US would not back down.

The Dow Jones Industrial Average fell 234.05 points, or 0.96 per cent, to 24,271.17.

The S&P 500 gained 0.7% to 2662.82 and the Nasdaq Composite rose 0.5% to 7076.55, reflecting fresh demand for tech stocks.

Asian stocks had a mixed day (http://www.marketwatch.com/story/asian-markets-waver-after-trumps-latest-broadside-against-china-2018-04-05), with the Hong Kong Hang Seng Index rising 1% on bets that the latest Trump tariff threat may not develop into any real issue.

Trump's top economic advisers have sought to temper fears of a trade war, calling the president's actions part of an effort to reach fairer trade terms with China.

U.S. stock futures were higher on Thursday, and most global markets posted gains in excess of 1%. China earlier said no talks were ongoing.

Stocks dipped further after Trump criticized the World Trade Organization on Twitter Friday morning.

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 United States intellectual property.

Are we going to have a much stronger country?

For the week, the Dow lost 170 points, or 0.7%, to 23,932.76. Among technology companies, Apple gave up $4.42, or 2.6 per cent, to $168.378 and PayPal shed $3.09, or 4 per cent, to $73.86.

Jason Pride, chief investment officer for Glenmede's private client business, said Trump's latest order caught investors off guard.

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

USA companies seen as more likely to be hit by trade tensions with China were among the biggest drags on the Dow, including Boeing, down 3.1 percent.

Still, she said businesses support the idea of making changes in America's trade relationship with China.

To make things worse, the United States economy added fewer jobs than expected in March, according to a government report released Friday morning.

Before the session started, a Labor Department report showed nonfarm payrolls increased by a smaller-than-expected 103,000 last month.

Benchmark U.S. crude dropped $1.48, or 2.3 per cent, to $62.06 a barrel in NY while Brent crude, used to price worldwide oils, lost $1.22, or 1.8 per cent, to $67.11 per barrel in London. Investors fear a full-blown trade war could erupt.

The pullback got here amid one other spurt larger in Treasury bond yields, a focus for traders involved that the Fed could speed up charge hikes if inflation rises all of a sudden. The lower yields mean banks can't make as much money from lending, and that send bank stocks lower. PayPal dipped $1.88, or 2.4 per cent, to $75.07. The benchmark index lost 1.4% over the week. Natural gas rose three cents to 2.70 dollars per 1,000 cubic feet.

METALS: Gold rose $7.60 to $1,336.10 an ounce.

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