x

Economy

US Stocks Fall Sharply as US-China Trade War Escalates

August 23, 2019

Stocks fell sharply on Wall Street Friday after President Donald Trump called on U.S. companies to consider alternatives to doing business in China. He also said he would respond to Beijing’s latest tariff increase.

The Dow Jones Industrial Average sank more than 400 points after the president made the announcements on Twitter.

Trump also said he was “ordering” UPS, Federal Express and Amazon to block any deliveries from China of the powerful opiod drug fentanyl. The stocks of all three companies fell as traders tried to understand what the implications for them were.

The U.S. has said it would impose 10% duties on the $300 billion of Chinese goods that were not already subject to tariffs. Early Friday China said it would retaliate with taxes on $75 billion of U.S. products.

The market opened lower with the news of the new tariffs. It recovered some of its losses after a widely anticipated speech by Federal Reserve Chairman Jerome Powell gave no clear signal on when the central bank may cut interest rates again.

Speaking at a Fed policy conference in Jackson Hole, Wyoming, Powell noted that there’s growing evidence of a global economic slowdown and suggested that uncertainty over Trump’s trade wars have complicated the central bank’s ability to set interest rate policy. Powell said the Fed “will act as appropriate to sustain the expansion.”

Markets have been jumpy for weeks as traders increasingly worry about a protracted trade war and whether it could tip the already fragile global economy into recession.

“There’s been reason to be concerned that this might not get resolved anytime soon, but the market is accepting that not only is it not likely, it’s very unlikely,” said Randy Frederick, vice president of trading and derivatives at Charles Schwab.

The S&P 500 was down 1.6% as of 12:30 p.m. Eastern Time. The Dow Jones Industrial Average lost 417 points, or 1.6%, to 25,834. The Nasdaq dropped 2%.

Technology companies, which have much to lose in the trade battle, accounted for the biggest share of the market’s losses. Chipmaker Nvidia slid 4.8% and Apple lost 4%. Companies that rely on consumer spending also took losses. Retailer L Brands dropped 6.8%.

Energy stocks headed lower along with crude oil prices. The price of crude sank 3% to $53.63 a barrel as traders worried that the latest escalation in the trade battle could sap global demand for energy.

U.S. bond prices rose sharply as investors sought safety, sending yields lower. The yield on the 10-year Treasury fell to 1.54% from 1.61%, a large move.

The price of gold, another safe haven for investors during times of market turbulence and economic weakness, rose 1.7% to $1,534 an ounce.

The Trump administration has imposed a 25% tariff on $250 billion in Chinese imports. The pending 10% tariff on another $300 billion in goods would hit everything from toys to clothing and shoes that China ships to the United States, however some 60% of the new tariffs wouldn’t go into effect until mid-December, and others were taken off the table altogether.

China gave no details of what goods would be affected in its latest round of tariffs, but the timing matches Trump’s planned duty hikes.

China’s government appealed to Trump this week to compromise in order to break a deadlock in negotiations.

By ALEX VEIGA AP Business Writer

RELATED

LOS ANGELES (AP) — Mortgage rates have been mostly ticking higher lately, but it’s not all bad news for home shoppers.

Top Stories

Columnists

A pregnant woman was driving in the HOV lane near Dallas.

General News

NEW YORK – Meropi Kyriacou, the new Principal of The Cathedral School in Manhattan, was honored as The National Herald’s Educator of the Year.

Video

If an uninformed person had attended the Mitsotakis-Erdogan press conference a few days ago in Ankara, s/he could have come to the conclusion that the meeting was planned in order to discuss whether Hamas is a terrorist or a patriotic organization.

As part of a club documentary offering an inside view of his final days at Liverpool, Jurgen Klopp was asked by the filmmakers to stand alone on The Kop one afternoon and gaze out around Anfield.

ABU DHABI, United Arab Emirates (AP) — In 2018, Chad McGehee opened Side Hustle Brews and Spirits, an Abu Dhabi-branded brewery and distillery with funky camels on its cans and playful names familiar to anyone living in the United Arab Emirates.

THE HAGUE, Netherlands (AP) — Israel strongly denied charges of genocide on Friday, telling the United Nations’ top court it was doing everything it could to protect the civilian population during its military operation in Gaza.

Enter your email address to subscribe

Provide your email address to subscribe. For e.g. [email protected]

You may unsubscribe at any time using the link in our newsletter.