US stock indexes flicker in the middle of a trade war

NEW YORK (AP) – US stock indexes rocked Friday after President Donald Trump said he could step up his trade battle with China. A strong employment report also pushed investors to position themselves for higher interest rates.

The S & P 500 rebounded between modest gains and losses throughout the day, but its most decisive move was the decline after Trump said it was ready to impose tariffs on virtually all goods imported from China. . Shares have largely reduced their losses during the afternoon.

Earlier in the day, the government's monthly employment report showed that hiring and wage gains for workers were healthier than expected in August. This is the most recent evidence that the US economy continues to be ahead of the game, and it paves the way for the Federal Reserve to raise short-term interest rates at its next month's meeting and beyond. of the. Treasury yields jumped in response.

KEEPING THE SCORE: The S & P 500 lost 2 points, or 0.1%, to 2,875 at 15:00. Eastern Time. It was previously up 0.2% and down 0.5%.

The Dow Jones Industrial Average dropped 42 points, or 0.4%, to 25,953, and the Nasdaq was virtually stable at 7,923.

COMMERCIAL: As the economy is so strong and corporate profits so high, stock prices would likely be higher than they are today, without investors' worries about global trade, said David Joy, chief strategist at Ameriprise Financial.

The United States has already imposed tariffs of $ 50 billion on Chinese imports, and Beijing has quickly followed suit, and investors are worried about the rise in the total. The concern is that escalating tariffs will reduce corporate profits and overall economic growth.

Trump told reporters Friday that "to a certain extent, it will be to China" while saying that he is ready to impose tariffs on 267 billion additional dollars of Chinese imports, which would add to the 200 billion Chinese dollars of goods.

The S & P 500 quickly lost about 0.3% after Trump commented.

"The underlying fundamentals of the economy are still pretty solid," said Joy of Ameriprise Financial, "but the more things go, the more destructive supply chains will be."

LOOKING AT RATES: Last month employers hired more workers than expected, and the unemployment rate remained near the lowest level in 18 years. This helped to increase the average hourly wage by 2.9% over the previous year, the fastest growth in eight years.

If wage gains continue to accelerate, this could fuel higher inflation across the economy. This in turn could push the Federal Reserve to be more aggressive in the face of rising rates, which it has pledged to do slowly and steadily.

Higher interest rates can hurt equity prices as they make bonds more attractive. The market experienced a similar scenario in February, when the monthly jobs report showed a surprisingly large increase in wages. But investors have recently prepared for four total rate increases for 2018, following comments by the Fed.

"What everyone is trying to understand is when you get the intersection between rising wages and inflation and the fact that the Fed is starting to be a little more aggressive." said Joy. "We are not there yet, but it brings us a little closer to that, and historically, that is what brings expansions and bull markets to an end."

RETURN: The 10-year Treasury bond yield jumped to 2.93% from 2.87% Thursday night. The two-year yield went from 2.62% to 2.69%.

DIVIDENDS DULLED: When bonds offer higher yields, they can move buyers away from stocks that pay big dividends. Corporate equities and real estate investment trusts, which are among the biggest dividends in the market, recorded some of the biggest losses of the day.

Utilities of the S & P 500 declined by 1.1% and real estate investment trusts lost 1.2%.

UP SMOKE: Tesla sank after his chief accountant resigned just a month after taking office. Dave Morton said he believed in Tesla and did not disagree with his leaders about his financial reporting, but he did not expect such public attention and at such a fast pace when he joined the group on August 6th.

Tesla's CEO, Elon Musk, also appeared in an overnight podcast in which he inhales from what the host says is a joint containing marijuana and tobacco.

Tesla fell 7% to $ 261.32.

TECH STEADY: Technology stocks have stumbled this week, a relatively rare event for a group that has dominated the market over the last five years. But they held up better than the rest of the market on Friday, and technology stocks of the S & P 500 were down 0.1% for one of the lowest losses among the 11 sectors in the index.

Broadcom was one of the strongest stocks in the index after posting higher than expected earnings in the final quarter. Shares of the chip maker jumped 7.6 percent to $ 232.29.

FOREIGN MARKETS: In Asia, Japan's Nikkei 225 index lost 0.8%, South Korea's Kospi lost 0.3% and Hong Kong's Hang Seng remained virtually unchanged .

In Europe, the French CAC 40 rose by 0.2% and the German DAX was almost stable. The FTSE 100 in London fell by 0.6%.

CURRENCIES: The dollar climbed to 111.09 Japanese yen against 110.83 yen on Thursday night. The euro fell to 1.1563 dollar against 1.1625 dollar and the pound fell to 1.2921 dollar against 1.2933.

COMMODITIES: US crude lost 2 cents to $ 67.75 a barrel. Brent, the international standard, rose 33 cents to 76.83 dollars per barrel.

Natural gas rose slightly by a fraction of a cent and stood at $ 2.78 per 1,000 cubic feet. Heating oil increased by one cent to reach 2.22 dollars a gallon and the wholesale gasoline rose from 2 to 1.97 dollars a gallon.

Gold slid from $ 3.90 to $ 1,200.40 per ounce, silver lost 1 cent to $ 14.17 per ounce and copper lost a cent to $ 2.62 the pound.

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Annabelle Liang, writer from AP, contributed from Singapore.