Dow dropped 98 points because the tariffs can finally hit home
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Tariffs Trump Jobs. All three major indices closed in the red again, building Thursday's loss after President Donald Trump announced several tariffs on imports from China. Christmas's work report came in as expected, but the market is now expecting another cut in interest rates at the Fed meeting in September due to the potential financial pressure caused by additional tariffs and halted business investment. In today's After the clock we checked…
- the latest market dynamics after intensified trading tension made investors a more risk-free mode;
- wonders how much damage the new tariffs can do to consumers;
- and look at the latest labor numbers in July.
Time to suffer?
Stocks continued to tumble on Friday as investors digested the potential impact of President Trump's recent $ 300 billion tariff on Chinese imports.
The
Dow Jones industrial average
lost 98.41 points, or 0.37%, to finish at 26485.01, while
S&P 500
fell 21.51 points, or 0.73%, to close at 2932.05 and
Nasdaq Composite
fell 107.05 points or 1.32% to close at 8004.07.
As uncertainties rose, gold prices rose to reach $ 1,459 a troy ounce, the highest level since May 2013. Bond prices also went up, pushing the return on the benchmark 10-year Treasury index down to around 1.853% on Friday, the lowest level since Trump's election on November 8, 2016. Still, since the low interest rates make bonds less attractive and risky, it may be time to keep some money back. [19659009] Contrary to the previous charge imposed since last year, the last round will mostly be aimed at popular consumer products, including cell phones, laptops, clothes and toys. "Trump's announcement of additional tariffs on Chinese goods will hit US consumers hardest," David Clement North American affairs officer for Consumer Choice Center said Thursday after the announcement. [19659009] “Given how interconnected the two economies are, it is finally American consumers who will be billing these new tariffs. Lawmakers need to understand better that tariffs on foreign products end up being a new tax for domestic consumers. In simple terms, tariffs are taxes, "said Clement.
David French senior vice president of government relations for National Retail Federation also showed strong concerns." As we have said repeatedly, we support the administration's goals to restructure the US-China trade relationship. But we are disappointed that the administration is doubling down on a flawed tariff strategy that is already slowing US economic growth, creating uncertainty and discouraging investment, ”French said in a statement Thursday. "We urge the administration to bring our allies to the table and find new tools beyond tariff rates to achieve better trade relations."
Although Federal Reserve Chairman Jerome Powell on Wednesday said the latest cut was only a mid-cycle adjustment, the latest tariff has given investors some renewed hope that it will give the central bank more pressure to cushion the economy with further relief .
The futures market for feed prices now has a 99.6% chance of a further Fed rate cut in September, a sharp increase from just 51% Wednesday after Powell's news conference.
A report from the Labor Department released Friday showed that the US economy added 164,000 jobs in July, less than it did in June, but largely in line with expectations. While this rate of job growth is slower than in 2018, it still signals a healthy but slower labor market. Despite the recent debate over drug prices and an overhaul of the country's medical system, the health care industry still led job growth, adding a robust 50,400 jobs last month.
Unemployment remained steady at 3.7%, just 0.1 points above the 50-year low. Growth in average hourly income rose to 3.2% in July year over year. The labor force participation rate and the employment population both got 0.1 points. "As the labor market continues to tighten, an uptick in these numbers signals that there are still more workers on the sidelines ready to go together for higher wages and jobs." Daniel Zhao senior economist at Glassdoor wrote on Friday.
Write to Evie Liu at evie.liu@barrons.com
