Sun, Apr 08, 2018 - Page 14 News List

Wall St down 2% as dispute intensifies

‘REACTION’:Investors try to avoid risks that might emerge over the weekend if the market is down on Friday, accelerating losses, the president of an investment firm said

Reuters, NEW YORK

US stocks dropped about 2 percent on Friday, with the Dow Jones Industrial Average falling more than 570 points, as US President Donald Trump’s latest tariff threat on Chinese imports fueled increasing concern over a US trade war with China.

Stocks added to losses and hit session lows in afternoon trading after US Federal Reserve Chairman Jerome Powell said the US central bank will likely need to keep hiking interest rates to keep inflation under control and said it was too soon to know if rising trade tensions would hit the US economy.

Fears of a trade war since Trump announced tariffs on steel and aluminum imports more than a month ago have kept investors on edge over concerns that such protectionist measures would hit global economic growth.

“It’s a reaction to concerns about the administration’s approach to trade. The market has vacillated between writing it off as just talk and assuming there could be a serious problem,” said Rick Meckler, president of investment firm LibertyView Capital Management LLC in Jersey City, New Jersey.

He and others said investors also appeared to be reducing risk ahead of the weekend.

“If the market is down it often tends to accelerate on Friday. Investors don’t want to take the risk of coming in Monday after having something happen over the weekend,” Meckler said.

Trump late on Thursday threatened to slap US$100 billion more in tariffs on Chinese imports, while Beijing said it was fully prepared to respond with a “fierce counterstrike.”

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

The S&P 500 industrials index, down 2.7 percent, had the biggest losses among sectors, though selling was broad-based.

Chipmakers, which as a group rely on China for about a quarter of their revenue, also declined. The Philadelphia semiconductor index fell 3.1 percent.

The Dow Jones fell 572.46 points, or 2.34 percent, to 23,932.76, the S&P 500 lost 58.37 points, or 2.19 percent, to 2,604.47 and the NASDAQ Composite dropped 161.44 points, or 2.28 percent, to 6,915.11.

The trade war worries continued to pressure stocks even as Trump administration officials sought to dampen concerns.

Trump’s top economic adviser Larry Kudlow said in various interviews that he learned of the new tariffs on Thursday night, but also said there are ongoing talks on trade between the US and China.

US Secretary of the Treasury Steve Mnuchin in an interview on CNBC said he was cautiously hopeful the US will reach an agreement with China on trade.

The S&P 500 ended just above its 200-day moving average after trading well below that key support level that is watched by technical analysts.

Powell, who was speaking on the US economic outlook in Chicago, also said the labor market appeared close to full employment.

It was his first speech on the economic outlook since taking over as chairman on Feb. 5.

Before the session started, a US Department of Labor report showed nonfarm payrolls last month increased by a smaller-than-expected 103,000. 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 US Federal Reserve’s 2 percent target.

“There was a hope that if he had a more dovish tone that that might be a counterbalance to the trade headwinds out there,” said Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.

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