DOW falls 724 points as stocks plunge

26 March, 2018, 01:31 | Author: Brooke Harris
  • Dow plunges 724 points as trade war fears rock Wall Street

Trade war fears heightened after China responded to U.S. President Donald Trump's plan on Thursday to put tariffs on up to $60 billion of Chinese goods by announcing plans of its own to hit up to $3 billion of U.S. imports with tariffs. The Dow lost 424 points, or 1.8 per cent, to 23,533, bringing its weekly decline to 1,400 points. The Nasdaq Composite fell 178.61 points, or 2.43%, to 7,166.68. On Friday chipmakers fared especially badly. The market fell further after Trump's lead lawyer, John Dowd, resigned from the president's personal legal team handling the Russian Federation investigation. Australia's S&P/ASX 200 skidded 1.9 percent to 5,824.50.

The S&P 500 and the tech-heavy Nasdaq Composite are also in retreat as investors nervously digested the trade volleys coming out of Washington and Beijing.

Despite the craziness, some money managers cautioned that the US economy remains fundamentally strong, aided by a tax cut, repatriation of corporate profits and a budget bill signed by President Trump on Friday that includes the largest hike in military spending in 15 years.

"What does this evolve into?" asked Mark Luschini, chief investment strategist at Janney Capital.

USA indexes had their worst drops since February 8. But investors are concerned tensions will keep rising, and that a round of sanctions and retaliation will affect the global economy and corporate profits.

The wild week wasn't all about tariffs. They had climbed earlier this week after the Federal Reserve raised interest rates, but then tumbled after the tariffs were proposed.

As of today (March 22), the Dow Jones industrial average, the index of 30 large, publicly traded American companies, is just.01% away from a correction-down 9.99% from its peak (paywall). That could change if it puts tariffs on products like electronics or appliances imported from China.

"No one will emerge a victor from a trade war", Li said at an annual news conference held during the meeting of China's ceremonial legislature.

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Germany's DAX lost 1.8 percent and the French CAC-40 fell 1.4 percent. It gave no indication of its possible response but a foreign ministry spokeswoman said China was "fully prepared to defend" its interests.

"The administration is moving forcefully into the anti-trade portion of its policy agenda", Barclays economist Michael Gapen wrote in a report on Friday.

Investor unease extended to the response from China, which urged the United States to "pull back from the brink", and unveiled its own plans to impose tariffs on up to $3 billion of USA imports.

For now, investors are downplaying the odds of a broad global shift towards protectionism and a big fight between the US and China.

The Dow blue-chip index of 30 bellwether stocks is now firmly in correction territory from its January 26 peak.

Selling was broad, with only the defensive utilities, up 1.18 per cent, and real estate, up 0.76 per cent, on the plus side out of 11 major S&P sectors.

The Nasdaq fell roughy 2.4 percent, while the S&P slid 2.5 percent.

USA stock futures were in negative territory.

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