Stocks tumbled Friday as the US-China trade war took a sharper turn, with President Donald Trump saying he ordered US companies to start looking for "an alternative to China" while clarifying further measures after that Beijing imposed retaliatory duties on imports of American goods.
Earlier, the big indices between modest gains and losses sneaked out after Federal Reserve Chairman Jerome Powell left the door for a new interest rate cut in September in a long-awaited speech in Jackson Hole, Wyoming.
How are the most important reference plans?
Stocks extended the declines before that closing clock. Dow Jones industrial average
was down 599 points, or 2.3%, at 25,653, while the S&P 500 index
dropped 73 points to 2,850, down 2.5%. Nasdaq Composite Index
thrown 229 points, or 2.9%, to 7,762.
What drives the market?
Prior to Friday's opening, China announced new 5% and 10% tariffs on US $ 75 billion in US imports, set to take effect in two tranches, on September 1 and December 15, respectively. The tariffs will be imposed on agricultural products, crude oil, small aircraft and cars among other goods. The Chinese government said the move was in response to the Trump administration's plans to impose 10% US $ 300 billion in Chinese imports, also in two phases and on the same dates, announced earlier in August.
See: Escalation in US-China trade war threatens world economy, Trump poses re-election risk
The move drew a furious response from Trump, who tweeted that he "had hereby ordered" US companies "to begin immediately to look for an alternative to China. "
"We always see sales when we step up the tensions," Art Hogan, chief strategist for National Securities, said in a telephone interview. "I would argue that this recent escalation is another taste of retaliation when you hereby" order "companies to stop doing business."
Market movements were probably also enhanced by thin trading conditions typical of a Friday in August, Hogan said.
Trump also blasted Powell in a tweet for apparently not sounding a more obnoxious tone about monetary policy in his Jackson Hole speech:
The president labeled Powell an "enemy", taking the longstanding tensions between the White House and the Federal Reserve – a traditionally opposing relationship – " to a whole new level, "Hogan said.
In the speech, Powell was seen leaving the door for a new interest rate cut at the central bank's next meeting on 17-18. September, saying, "We have seen further evidence of a global decline," since the Fed's last meeting in July.
At the same time, he said that "the US economy has continued to perform overall" while "inflation appears to be approaching 2%," the Fed's annual inflation target. Low inflation was a major reason for cutting interest rates last month.
"It's not surprising that he was vague, and on purpose," said Randy Frederick, vice president of active trading strategies and derivatives at Charles Schwab. "He wants to be quick and doesn't want the market to move on with what he said."
Futures markets for the Fed indicate that investors see the speech as mild chlorine. Before the speech, the market priced a 95.8% chance of an interest rate cut and a 4.2% chance of no cut. After the speech, the probability of at least 25 basis points increased to 100%, and the market shows a 5% chance of 50 cuts.
On the data data front, new home sales in July fell 12.8% to an annual interest rate of 635,000 homes, below the median forecast of 650,000, according to a market survey of economists.
Which shares are in focus?
Shares of Foot Locker Inc .
fell 17% after the retailer reported sales and profits in the second quarter as it hit Wall Street expectations.
HP Inc. .
shares fell more than 7%, after the PC and printer manufacturer announced that Enrique Lores would take over as CEO effective November 1, along with third-quarter results that matched the analyst expectations.
Salesforce.com Inc. .
CRM, + 2.25%
reported quarterly financial results late Thursday, showing revenue growth and earnings per share that beat Wall Street forecasts. The company's share rose 3.3%.
Shares of Intuit Inc .
INTU, + 1.10%
rose 3.4%, following a release of better-than-expected fourth quarter results Thursday night.
Hasbro Inc. .
announced plans late on Thursday to acquire UK company Entertainment One Ltd
ETO, + 31.94% ,
in a deal that values the company at $ 4 billion. The toy manufacturer's share declined more than 7%.
How do other markets trade?
Return on the 10-year US Treasury
fell 6.9 basis points to 1.533 %%, while for the 2-year note
fell 7.5 basis points to 1.523%
Stocks in Asia traded mixed overnight, such as China's CSI 300
000300, + 0.72%
increased 0.7%, Hong Kong's Hang Seng Index
HSI, + 0.50%
achieved 0.5% and Japan's Nikkei 225
NIK, + 0.40%
In Europe, most traded lower, with the Stoxx Europe 600
and lost 0.8%.
In commodity markets, the price of American oil is
fell 3.1%, after China announced that US crude oil would be subject to new tariff rates. gold Prices
GCZ19, + 1.84%
DXY, -0.45% ,
a currency target against a basket of six major rivals, down 0.4%.