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Wall Street ends down 2 percent as trade worries mount

Stock MarketsApr 06, 2018 04:46PM ET
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© Reuters. A trader on the floor of the New York Stock Exchange watches the stock market drop on his screen shortly before the closing bell in New York

By Caroline Valetkevitch

NEW YORK (Reuters) - U.S. stocks dropped about 2 percent on Friday, with the Dow falling more than 570 points, as U.S. President Donald Trump's latest tariff threat on Chinese imports fueled increasing concern over a U.S. trade war with China.

Stocks added to losses and hit session lows in afternoon trading after Federal Reserve Chairman Jerome Powell said the U.S. central bank will likely need to keep hiking interest rates to keep inflation under control and said it was too soon to know if rising trade tensions would hit the U.S. economy.

Fears of a trade war since Trump announced tariffs on steel and aluminum imports more than a month ago have kept investors on edge over concerns that such protectionist measures would hit global economic growth.

"It's a reaction to concerns about the administration's approach to trade. The market has vacillated between writing it off as just talk and assuming there could be a serious problem," said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey.

He and others said investors also appeared to be reducing risk ahead of the weekend.

"If the market is down it often tends to accelerate on Friday. Investors don't want to take the risk of coming in Monday after having something happen over the weekend," Meckler said.

Trump late Thursday threatened to slap $100 billion more in tariffs on Chinese imports, while Beijing said it was fully prepared to respond with a "fierce counter strike".

The trade war worries continued to pressure stocks even as U.S. Treasury Secretary Steve Mnuchin in an interview on CNBC Friday said he was cautiously hopeful the United States will reach an agreement with China on trade.

U.S. companies seen as more likely to be hit by trade tensions with China were among the biggest drags on the Dow, including Boeing (N:BA), down 3.1 percent. The S&P 500 industrials index (SPLRCI), down 2.7 percent, had the biggest losses among sectors, though selling was broad-based.

Chipmakers, which as a group rely on China for about a quarter of their revenue, also declined. The Philadelphia semiconductor index (SOX) fell 3.1 percent.

The Dow Jones Industrial Average (DJI) fell 572.46 points, or 2.34 percent, to 23,932.76, the S&P 500 (SPX) lost 58.37 points, or 2.19 percent, to 2,604.47 and the Nasdaq Composite (IXIC) dropped 161.44 points, or 2.28 percent, to 6,915.11.

The S&P 500 ended just above its 200-day moving average after trading well below that key support level that is watched by technical analysts.

Powell, who was speaking on the U.S. economic outlook in Chicago, also said the labor market appeared close to full employment. It was his first speech on the economic outlook since taking over as chairman on Feb. 5.

Before the session started, a Labor Department report showed nonfarm payrolls increased by a smaller-than-expected 103,000 last month. While annual growth in average hourly earnings rose to 2.7 percent, it stayed below the 3 percent that economists estimate is needed to lift inflation toward the Federal Reserve's 2-percent target.

"There was a hope that if he had a more dovish tone that that might be a counterbalance to the trade headwinds out there," said Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.

For the week, the S&P 500 was down 1.4 percent, the Dow was down 0.7 percent and the Nasdaq was down 2.1 percent.

Facebook (O:FB) share were down 1.3 percent. It backed for the first time proposed legislation requiring social media sites to disclose the identities of buyers of online political campaign ads and introduced a new verification process for people buying "issue" ads, which have been used to sow discord online.

Declining issues outnumbered advancing ones on the NYSE by a 3.77-to-1 ratio; on Nasdaq, a 3.59-to-1 ratio favored decliners.

The S&P 500 posted two new 52-week highs and seven new lows; the Nasdaq Composite recorded 40 new highs and 64 new lows.

About 7.2 billion shares changed hands on U.S. exchanges. That compares with the 7.3 billion daily average for the past 20 trading days, according to Thomson Reuters data.

Wall Street ends down 2 percent as trade worries mount
 

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Comments (4)
Sebastian Stancu
Sebastian Stancu Apr 06, 2018 4:57PM ET
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Well at least Investing.com didn't post a another pic of a stupid growling bear like all the other financial websites.
AMIT MONDAL
AMIT MONDAL Apr 06, 2018 1:22PM ET
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it is not about any news regarding China & USA .....its about the stock being over valued according to there fundamental valuation.... so market needs some time correction....& all other concern is useless that media is playing with....
AMIT MONDAL
AMIT MONDAL Apr 06, 2018 1:15PM ET
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what the ***** going......one news for trade war cool and another is showing uncertainty......
Louis bravo
Louis bravo Apr 06, 2018 8:16AM ET
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Clearly trump just wants war and we the people of America will have to pay the bill hopefully it only cost us our retirement and not a world war. This republican will be voting against trump next election I don’t care who it is anymore.
Show previous replies (3)
Martin Wyckoff
Wyckoff Apr 06, 2018 8:16AM ET
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Short the market is the surest thing this year
Patron Silver
Patron Silver Apr 06, 2018 8:16AM ET
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The argument 'why dont u leave the country' is so stupid and weak. Why not take a stand against corruption and favortism right here. Trump fans have no clue that he is in it for himself and his corporate buddies not u bub
DHIRAJ Gupta
DHIRAJ Gupta Apr 06, 2018 8:16AM ET
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I love America. Trump is doing best for his country lots of courage . Everyone should support Trump.
Bill St
Bill St Apr 06, 2018 8:16AM ET
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DHIRAJ Gupta  doesn't the fact that most (if not almost all) economists are panning Trump's trade policies give you pause in your unwavering support of the dotard-in-chief? It probably should.
John Theos
John Theos Apr 06, 2018 8:16AM ET
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Bill St  Economists care about facts and figures. They don't care about people. They don't care about Americans. Are trade wars destructive? Yes. That's why it's called war. China's aggressive trade practices have already crippled American industries and displaced thousands of American workers. They've been "warring" with the U.S. economy for decades. Of course, the business people who benefit from these trade practices are not going to complain, that is, until someone like Trump comes along to stand up for the American worker. If you put your hate aside for a minute, you'd see that Trump is doing exactly what he needs to do. And, just for the record, I'm a progressive liberal who did not endorse Trump during the general election. Even though I don't agree with all of Trump's policies, I can see that the man is fighting for America, like a U.S. president SHOULD be... for a change. Stop complaining and let him fight.
 
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