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Wall St. Tumbles as Trump Threatens to Impose New Tariffs on China
A Wall Street selloff deepened on Friday as President Donald Trump threatened to impose new tariffs on Beijing over the coronavirus crisis, compounding fears about the pace of an economic recovery from a looming recession.
Trump's threat pulled attention back to the trade war between the world's two largest economies, which have slapped tit-for-fat tariffs on each other's goods and kept global financial markets on tenterhooks for nearly two years.
While the two sides reached a so-called Phase-1 trade deal in January, tariffs of up to 25% have remained on some $370 billion worth of Chinese goods imports annually.
“A rise in tension between China and the US certainly could have a negative impact on the US economy and business confidence, which is already hurt due to shutdowns,” said Carin Pai, director of equity management at Fiduciary Trust International in New York.
Investors are also nervous after grim manufacturing data underlined the extent of the economic damage from state-wide curbs, Pai said.
World #Stocks pulled back further on grim US #Economic data and President Trump’s threat to impose new #Tariffs on #China over the #CCPVirus crisis. https://t.co/gXSSzonrla
— The Epoch Times (@EpochTimes) May 2, 2020
US manufacturing activity plunged to an 11-year low in April, supporting analysts' views the economy was sinking deeper into recession. However, the Institute for Supply Management's (ISM) index reading of 41.5 last month was a smaller than the expected drop to 36.9.
The energy index slid 5.4% as big oil firms Exxon Mobil and Chevron Corp said they were slamming the brakes on US shale oil production due to a crash in oil prices.
The consumer discretionary subindex slid 5% after Amazon.com Inc said it could post its first quarterly loss in five years as it was spending at least $4 billion in response to the coronavirus pandemic. The e-commerce giant's shares tumbled 7.8%.
Apple Inc fell 1.5% after Chief Executive Officer Tim Cook said it was impossible to forecast overall results for the current quarter because of uncertainty created by the virus.
The S&P 500 technology index shed 3% led by declines in trade-sensitive chip stocks. The Philadelphia Semiconductor index fell 5%.
With nearly half of the S&P 500 companies having reported results so far, analysts expect a 12.7% fall in profits for the first quarter and an even sharper decline of 37.8% for the current quarter.
Still, aggressive stimulus measures and hopes of reopening the economy from virus-induced curbs have helped the S&P 500 index post its best month in 33 years in April. The benchmark index is now nearly 20% away from reclaiming a record high hit in February.
At 1:38 p.m. ET the Dow Jones Industrial Average was down 615.30 points, or 2.53%, at 23,730.42, the S&P 500 was down 87.37 points, or 3.00%, at 2,825.06 and the Nasdaq Composite was down 314.84 points, or 3.54%, at 8,574.71.
United Airlines Holdings Inc plunged 9.6% after posting a first-quarter loss of $1.7 billion.
Declining issues outnumbered advancers for a 7.29-to-1 ratio on the NYSE and for a 6.39-to-1 ratio on the Nasdaq.
The S&P index recorded no new 52-week high and two new lows, while the Nasdaq recorded 16 new highs and 10 new lows.
(Source: Reuters)
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