US stocks plummet amid US-China trade war
3 Min Read
The United States is facing one of its worst economic periods in years as its stocks fall as President Donald Trump insists on his economic policies.
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A board above the trading floor shows the closing number for the Dow Jones industrial average at the New York Stock Exchange, Friday, Aug. 2, 2024 (AP)
Wall Street stocks opened sharply lower on Friday, extending a market rout after China responded in kind to President Donald Trump's sweeping tariff announcement.
Investors largely overlooked stronger-than-expected US job data, instead focusing on the growing trade tensions between the world’s two largest economies.
All three major US stock indices remained in negative territory, deepening losses from the previous session. The S&P 500, which had suffered its steepest drop since 2020 on Thursday, fell another 3.2% to 5,223.19.
The Dow Jones Industrial Average declined 2.8% to 39,412.00, while the tech-heavy Nasdaq Composite dropped 3.6% to 15,949.93.
Despite the downturn, the latest US employment report from the Department of Labor showed the economy added 228,000 jobs last month, surpassing analyst expectations and significantly improving on February’s revised 117,000 figure. However, the strong hiring data did little to reassure investors, as attention remained on Beijing’s swift retaliatory measures.
'My policies will never change'
China announced it would impose 34% tariffs on US imports while also enacting export controls on seven rare earth elements crucial to American manufacturing. The move came just days after Trump unveiled what he called “Liberation Day” tariffs, escalating the trade conflict.
Trump remained defiant, writing on his Truth Social platform, “My policies will never change.”
Market analysts warned that the tit-for-tat tariffs could deepen economic uncertainty. "Investors are worried about the economic consequences of these escalating tariffs," said Sam Stovall of CFRA Research. He added that despite the strong jobs data, markets fear the Federal Reserve may delay potential interest rate cuts due to ongoing inflation concerns.
All 11 sectors of the S&P 500 fell, with energy stocks leading the decline. Oil producers and service companies slid as crude prices weakened amid concerns over reduced global demand.
Dollar falls against euro
The US dollar plummeted 1% against the euro on Wednesday, as President Donald Trump said that he would sign an order imposing retaliatory tariffs on US trading partners.
The dollar also fell against other important currencies, such as the British pound sterling and the Swiss franc.
"For traders and investors, today represents a day of huge uncertainty as we weigh up the potential for retaliatory tariffs and a tit-for-tat trade war," said Joshua Mahony, analyst at traders Scope Markets.
Global equities have been hit hard leading up to Trump's announcement, with allies and competitors alike in the crosshairs after what he said are years of "ripping off" the United States.
US stocks fell in after-hours trading as President Donald Trump unveiled the sweeping tariffs of a minimum 10%, but even higher for some countries.
