US Stocks Have Their Worst Trading Day Since January

The Dow ended the day more than 600 points lower as China retaliates with new tariffs on imports in the escalating trade war.

China_issues_new_tariffs_as_Dow_plunges
The Dow plunged more than 600 points after China issued new tariffs on US Imports.
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With fresh threats from China to raise tariffs, both the Dow and the S&P 500 ended markedly lower today. The threats were in response to the U.S. tariff increase from last week.

China announced tariffs in retaliation in the form $60 billion on U.S. goods. Investors were seen fleeing equities in exchange for less risky assets.

The two countries have been sparring over tariffs since last year. But, an escalation towards a trade war has been seen since Trump’s announcement via tweet to raise tariffs on China.

Following the threat, his administration raised tariffs by 25 percent on $200 billion worth of imported goods from China. The hike doesn’t affect goods currently in route, allowing time for negotiation.

Fresh tweets from the President encouraging U.S. companies to produce more domestic goods fired off this weekend. The President said new tariffs could be avoided that way and also commented that any ongoing deals with China would be threatened if negotiations continued past next year’s elections.

Athanasios Vamvakidis, strategist for Bank of America said: “This is a clear escalation of trade tensions in our view and against our baseline that cool heads would prevail and the worst would be avoided.”

Vamvakadis further commented that each country still has strong incentives to compromise, while also knowing what’s at stake if a resolution isn’t reached.

Geng Shuang, a spokesperson for the Ministry of Foreign Affairs, said he didn’t think China would yield to U.S. pressure and the country would continue to protect its rights.

The Monday sell-off marked the lowest since January 3 for the Dow. The Dow had fallen to 719 earlier in the day but ended with a 617 point drop. The S&P 500 dropped 2.4 percent while the Nasdaq fell 3.4 percent.

The sell-off was the worst for the Nasdaq this year and the most it had dropped in a single day since December 4 of last year.

Nearly every Dow stock was affected with the exception of Proctor and Gamble which ended ten cents higher. The win for the S&P 500 was the utility sector. Most utility stocks ended higher.

Small-cap stocks in the Russell 2000 were corrected from its double-digit drop from last August.

In addition to U.S. stocks closing lower, European and Asian stocks also traded lower.

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