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1 of 1- Siagiah
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Offline - From: New England, U.S.A.
- Registered: 2/16/2019
- Posts: 2,532
Markets PLUNGE 617 points due to the tRUMP tradewar with China
Dow plunges 617 points after China retaliates with higher tariffs
By Anneken Tappe, CNN Business
Updated 4:08 PM ET, Mon May 13, 2019
New York (CNN Business)The Dow plunged Monday after China said it will raise tariffs in retaliation to last week's tariff increase by the United States.
China hiked tariffs on $60 billion of imports from the United States. It first imposed the tariffs last year.Worries over the escalation of the trade spat with China just aren't going away.
US stocks ended the day sharply lower. The Dow closed down 617 points after falling as much as 719 points earlier in the day. The S&P 500 (SPX) fell 2.4% and the Nasdaq (COMP) dropped 3.4%.
The Dow and S&P 500 had their worst day since January 3, according to Refinitiv. The Nasdaq had its worst day of 2019 and biggest one-day drop since December 4, 2018.
Only a single Dow stock, Procter and Gamble, was positive (by a dime). In the S&P 500, only a few dozen companies had moved higher, and most of them were in the utilities sector, which tends to not react to big broad market moves.
The Russell 2000 Index of small-cap stocks fell into correction territory. It has dropped more than 10% from its August 2018 high.
Last week, tensions escalated between Washington and Beijing, starting with a tweet from President Donald Trump on Sunday, May 5. Trump threatened further tariffs on Chinese imports, and his administration followed through on Friday, when it raised tariffs to 25% from 10% on some $200 billion worth of imported goods from China. The additional tariffs are not expected to affect goods already in transit, which buys negotiators a new negotiation window.
Stocks recovered on Friday after Trump and Treasury Secretary Steven Mnuchin called last week's talk with Chinese negotiators "constructive." Still, the Dow ended the week 2.1% lower, making its worst week since March.Over the weekend, Trump tweeted extensively about the trade spat, calling US companies to produce goods domestically to avoid tariffs and that a trade deal will get worse for China if negotiations dragged on past the presidential election in 2020. He also reiterated that Beijing "broke the deal"..
"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," wrote Bank of America strategist Athanasios Vamvakidis in a note.
Trump also partly attributed the first quarter US GDP growth of 3.2% to his tariff strategy.
White House economist adviser Larry Kudlow said on Sunday the US expected retaliation from China over the new tariffs.
China will "never yield to external pressure" and is determined to protect its rights, said Geng Shuang, a spokesperson for the Ministry of Foreign Affairs on Monday.
"We still believe that both countries have strong incentives to compromise and that the authorities are well aware of what is at stake for their economies otherwise. A call between Presidents Trump and Xi in the next few days could easily turn everything back to normal," said Vamvakidis.
European stocks closed lower across the board. Asian markets also finished lower, with the Shanghai Composite (SHCOMP) ending Monday trading down 1.2%.
- Pikes Peak 14115
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Re: Markets PLUNGE 617 points due to the tRUMP tradewar with China
First, China has 80% of our GDP, but only 26% of our debt. Therefore they can outlast us.
Second, they own about $7 trillion of our $22.3 trillion debt.
Trumpeons like the phrase, "He dug in his heels." Makes him appear heroic. Fighting back, with business math skills equal to his truthfulness.
So the markets, which for about 11 months fluctuated wildly on speculation, now have the real, bonafide trade war to fear. Today is likely beginning of a trend. A correction. Will it lead to a recession? 1.8% of the 3.2% GDP growth reported last quarter is due to rise in gasoline price. It is on a trend to flirt with $5 per gallon about the time of the 2020 election. This time, the republicans must time the recession better, not to begin prematurely before Trump loses and leaves office. Of course last time while it began under Bush, it didn't take long for the liars to pin it on Obama anyway.
You can look away from a painting, but you can't listen away from a symphony