Wall Street drops on rising trade tensions
U.S. stocks fell on Friday after the United States announced tariffs on $50 billion worth of Chinese goods, prompting Beijing to warn of retaliation and reigniting fears of a trade war between the world`s two largest economies.
President Donald Trump said in a statement that a 25 percent tariff would be imposed on an initial list of strategically important imports from China from July 6 and vowed further measures if Beijing struck back.
In response, China`s Commerce Ministry said it planned to impose tariffs of similar size and intensity. Beijing has published its own list that targets $50 billion in U.S. goods, including soybeans, aircraft and autos.
Boeing, the single largest U.S. exporter to China, fell 1.9 percent, dragging the Dow lower for the fourth day in a row.
Construction equipment maker Caterpillar dropped 2.4 percent, agricultural trader Bunge 2.3 percent and automaker General Motors 1.6 percent
Global financial markets have struggled since February in the face of signs Washington and Beijing were headed toward a trade war after several rounds of negotiations failed to resolve U.S. complaints over Chinese industrial policy, market access and a $375 billion trade gap.
"With the announcement of the tariffs there`s a real risk that we can see a continued increased escalation," said Robin Anderson, senior economist at Principal Global Investors in Des Moines, Iowa.
"A lot of market participants had anticipated the Trump administration and the Chinese to negotiate and not fully implement tariffs. But they did, which is a little bit of a disappointment."
Investors are also weighing the impact of tightening monetary policy by central banks on the equities market.
The U.S. Federal Reserve increased its key interest rate for the second time this year on Wednesday and hinted at the possibility of two more hikes by the end of 2018.
The European Central Bank weighed in on Thursday to say it would end its bond-purchase program at year-end, even if any interest rate hike was still distant.
At 11:24 a.m. ET the Dow Jones Industrial Average was down 207.49 points, or 0.82 percent, at 24,967.82, the S&P 500 was down 11.02 points, or 0.40 percent, at 2,771.47 and the Nasdaq Composite was down 27.66 points, or 0.36 percent, at 7,733.38.
Eight of the 11 major S&P sectors were lower, led by a 1.7 percent loss in the energy index.
Brent crude dropped more than $2 a barrel ahead of an OPEC meeting in Vienna next week as two of the world`s biggest producers, Saudi Arabia and Russia, indicated they were prepared to increase output.
Adobe shares dropped 1.9 percent after the company projected third-quarter revenue that fell slightly below estimates.
Declining issues outnumbered advancers for a 1.63-to-1 ratio on the NYSE and for a 1.42-to-1 ratio on the Nasdaq.
The S&P index recorded 16 new 52-week highs and four new lows, while the Nasdaq recorded 93 new highs and 25 new lows.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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