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Shares fell on Friday as the US-China trade war took a more abrupt turn. President Donald Trump has ordered US companies to start looking for "an alternative to China," while preparing additional measures after Beijing imposed retaliatory tariffs on imports of US goods.
Earlier, major indexes had tipped between modest gains and losses after Federal Reserve Chairman Jerome Powell left the door open for further interest rate cuts in September in a much-anticipated Jackson Hole speech. , in Wyoming.
How are the main landmarks?
Extended stocks decline before the closing bell. The Dow Jones Industrial Average
DJIA, -2.37%
was down 599 points, or 2.3%, to 25,653, while the S & P 500 index
SPX, -2.59%
lost 73 points to 2,850, a decrease of 2.5%. The Nasdaq composite index
COMP -3.00%
lost 229 points, or 2.9%, to 7,762.
What motivates the market?
Before Friday's opening, China announced new tariffs of 5% and 10% on US imports of $ 75 billion, to come into effect in two installments, September 1 and December 15, respectively. Customs duties will be applied to agricultural products, crude oil, small aircraft and cars, among others. The Chinese government said the move was in line with the Trump government's plans to introduce 10 percent tariffs on Chinese imports of $ 300 billion, also in two stages and on the same dates announced earlier in August.
See: The escalation of the US-China trade war threatens the global economy and poses the risk of Trump's reelection
This decision provoked a furious response from Trump, who tweeted that he had "ordered" "American companies" to "immediately start looking for an alternative to China".
"We are still seeing a selloff as we intensify the tensions," said Art Hogan, chief markets strategist for National Securities, during a phone interview. "I would say that this recent escalation is a different type of retaliation when you" order "companies to cease their activities."
Market movements were probably also amplified by the weak market conditions typical of Friday of August, Hogan said.
Trump also criticized Powell in a tweet for not seeming more neutral about monetary policy in his Jackson Hole speech:
Powell described President Powell as "an enemy", taking on the persistent tensions between the White House and the Federal Reserve – a traditionally contradictory relationship – "on a whole new level".
In the speech, Powell was seen leaving the door open for further interest rate cuts at the next meeting of the central bank on September 17 and 18, stating, "We have seen signs of 'a global slowdown' since the last Fed meeting in July.
At the same time, he said that "the US economy continues to perform well," while "inflation seems to be close to 2%," the Fed's target for annual inflation. Low inflation was one of the main reasons for the rate cut last month.
"It's not surprising that it's vague and intentional," said Randy Frederick, vice president of active trading strategies and derivatives at Charles Schwab. "He wants to be agile and he does not want the market to act on what he said."
Futures markets for federal funds indicate that investors view the speech as slightly dovish. Before the speech, the market had a 95.8% chance of a rate cut and a 4.2% chance of not falling. After the speech, the probability of a reduction of at least 25 basis points rose to 100%, the market showing a 5% probability of a 50 basis point reduction.
According to the data, new home sales fell by 12.8% in July to reach an annual rate of 635,000 units, below the median forecast of 650,000, according to a survey by MarketWatch of the United States. ; economists.
What stocks are under discussion?
Actions of Foot Locker Inc.
FL -18.91%
fell 17% after the retailer posted second-quarter sales and earnings lower than Wall Street expectations.
HP Inc.
HPQ, -5.92%
stocks fell more than 7%, after PC and printer maker announced that Enrique Lores would assume the role of CEO effective November 1st, with Q3 results in line with analysts' expectations .
Salesforce.com Inc.
CRM + 2.25%
released its quarterly financial results late Thursday, showing higher earnings growth and earnings per share than Wall Street forecasts. The company's shares rose 3.3%.
Actions of Intuit Inc.
INTU, + 1.10%
rose 3.4%, following the release of better-than-expected fourth quarter financial results on Thursday night.
Hasbro Inc.
AT, -8.94%
announced plans late Thursday to acquire the British firm Entertainment One Ltd
ETO + 31.94%,
in an agreement that values the company at $ 4 billion. The toy maker's shares fell by more than 7%.
How are other markets traded?
10-year US Treasury note yield
TMUBMUSD10Y, -4.83%
decreased by 6.9 basis points to 1.533 %%, while that of the note at 2 years
TMUBMUSD02Y, -5.36%
down 7.5 basis points to 1.523%
Asian equities traded mixed overnight, China's CSI 300
000300, + 0.72%
0.7%, the Hong Kong Hang Seng Index
HSI, + 0.50%
0.5% and Japan's Nikkei 225
NIK + 0.40%
climbed 0.4%.
In Europe, stocks traded mainly downwards, with the Stoxx Europe 600
SXXP, -0.78%
lose 0.8%.
In commodity markets, the price of US oil
CLV19, -2.64%
fell 3.1%, after China announced that US crude oil would be subject to new tariffs. Gold price
GCZ19, + 1.88%
jumped 1.7% to $ 1,533.60 an ounce. The US dollar fell, with the highly-monitored ICE US Dollar Index.
DXY, -0.46%,
a measure of the currency against a basket of six major rivals, down 0.4%.
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