Trump's aggressive and mixed signals on Chinese whiplash vs. Wall Street

SAN FRANCISCO (Reuters) – President Donald Trump's aggressive stance and the often mixed signals of his trade war with China weigh on the stocks of US companies that are most dependent on the world's second-largest economy.

US stocks rose more than 1% on Monday after Trump predicted a trade deal between China and China following remarks by Deputy Prime Minister Liu He, who led discussions with Washington, that China was willing to resolve their dispute through "calm" negotiations.

Friday, the S & P 500 fell 2.6% after Trump announced the imposition of an additional tariff on some $ 550 billion of Chinese goods, in retaliation for the announcement by Beijing new Rates earlier this day. Trump also sent a tweet demanding that US companies look for alternatives to trade with China, but they seem to have resisted the threat on Sunday.

Growing uncertainty over Trump's plans for a year-long trade dispute adds to the pain on Wall Street, where investors fear that tariffs will trigger a recession in the US economy.

"This trade war has more twists than a film by Quentin Tarantino," said Edward Moya, market analyst at OANDA, in a research note. He added that higher and wider tariffs would punish US consumers and potentially hinder the US economy.

A group of companies affected by the trade war, created by Barclays, significantly underperformed the S & P 500 index this month, after being balanced with the broader market of the three previous months. Barclays' basket includes companies that rely heavily on imports from China and are likely to experience pressure on their profit margins, such as Apple (AAPL.O), Nike (NKE.N) and Honeywell International (HON.N).

US semiconductor stocks also underperformed this month. Micron Technology (MU.O), Qualcomm (QCOM.O) and Qorvo (QRVO.O) each derive 50% or more of their income from China. Consumer electronics and other semiconductor-based products will be included in additional US tariffs starting Sept. 1 and Dec. 15, the US government announced this month. The Philadelphia Semiconductor .SOX index lost nearly 6% in August.

Trump's growing trade war and the slowdown in China's economic expansion have hurt many other US industrial and industrial companies, which in recent years have relied on China to boost their growth.

Detroit auto manufacturers, General Motors Co (GM.N) and Ford Motor Co (F.N) reduced their profit forecasts for the full year due to higher rates. Caterpillar Inc (CAT.N) recently said that tariffs on imports from China are expected to increase its material costs up to $ 200 million in the second half of 2019.

"The way forward is not at all certain and, as it's too long for the beach, investors could be burned by the next announcement" surprise, "warned Monday's portfolio manager. Kingsview Asset Management, Paul Nolte, in a note to investors.

"Or a cool breeze could come up and everything will be fine with the world. It's the best guess of anyone.