NATIONAL NEWS

Worsening US-China Trade Tensions Rattle Financial Markets

May 7, 2019, 12:42 PM | Updated: Jun 8, 2022, 5:09 pm
The New York Stock Exchange (NYSE) stands in the Financial District on Monday morning, May 6, 2019 in New York City. (Photo by Drew Angerer/Getty Images)
(NYSE)

The Dow Jones Industrial Average tumbled more than 500 points Tuesday amid a broad sell-off on Wall Street as the U.S. and China inched closer to a potential escalation in their costly trade war.

The U.S. was set to impose higher tariffs on China on Friday, a day after representatives from both nations were scheduled to resume trade talks Thursday in Washington.

The looming deadline followed President Donald Trump’s threat on Sunday to raise tariffs on China in a bid to pressure Beijing to reach a long-sought resolution to the trade conflict between the world’s two biggest economies. The ongoing feud has raised costs on goods for consumers and companies.

The possibility that the trade dispute could escalate represents a marked shift from just a few weeks ago, when talks between the U.S. and China appeared to be on track for an agreement. That expectation helped boost the stock market’s rally this year.

Jitters over the tougher rhetoric from the U.S. on trade sent the market sharply lower Monday, though the sell-off lost momentum by the end of the day. On Tuesday, the wave of selling intensified as the day went on.

The S&P 500 index was down 1.9% as of 2:15 p.m. Eastern Time. The Dow lost 531 points, or 2%, to 26,906. The Nasdaq composite fell 2.2%. Major indexes in Europe also fell.

The rout is the first big jolt for stocks since the turn of the year, when fear began draining out of the market and the S&P 500 started its march back to record heights.

For months, the S&P 500 climbed steadily as worry after worry that had hounded investors late last year seemed to dissipate. Chiefly, the Federal Reserve promised to take a patient approach with interest rates. That calmed investors who had worried the Fed would push the economy into a recession by raising rates too aggressively. Economic data also improved in the United States and China, which encouraged investors.

The big rise in stocks since the beginning of the year partly reflects complacence among investors, said Mark Hackett, chief of investment research for Nationwide Investment Management.

“We’ve basically flipped from being too pessimistic to perhaps being too optimistic,” he said.

The S&P 500, down 1.9% Tuesday, was on pace for its worst day since Jan. 3. It’s only the third time this year that the index has lost at least 1.5%. Last year saw 23 such days, with many clustered in the final few months.

Tuesday’s selling was also relatively indiscriminate, and 95% of the companies in the S&P 500 were down.

The trade dispute between China and the United States is nothing new, and it had been hanging over the market even as the S&P 500 made its run to a record this year. But investors had been willing to push stocks higher despite it because they largely assumed a deal would eventually get done. That showed in share prices of U.S. companies that get big portions of their sales from China, which had done better than the rest of the market, according to analysts at Jefferies.

Trump’s threat of additional tariffs is forcing investors to reassess those expectations. One measure of fear in the market, which tracks how much traders are paying to buy protection from price swings in the S&P 500, had its biggest jump Tuesday in nearly seven months. It still remains low by historical standards, though, after earlier in the year dropping by more than half since the end of 2018.

Every sector fell. Technology companies led the decline. Utilities, normally safe-play holdings for investors, fared better than the rest of the market. Bond prices also rose as investors sought out other ways to reduce risk.

It’s yet to be determined whether the brinksmanship tactics from the Trump administration will help or hurt the prospects of a deal getting done quickly, something that investors want.

“This is such a short period of time that it’s hard to speculate whether this will cause something to get done quickly or whether it will drag on for months,” said Scott Wren, senior global equity strategist at Wells Fargo Investment Institute.

Western Digital was among the biggest decliners in the technology sector, dropping 5%. Microsoft fell 2.2% and Intel slid 2.1%. JPMorgan Chase fell 1.8% and Bank of America gave up 2.1%.

___

AP Business Writers Stan Choe and Damian J. Troise contributed to this report.

KSL 5 TV Live

Top Stories

National News

FILE: U.S. Secretary of Defense Lloyd Austin speaks during a news briefing at the Pentagon July 21,...
TARA COPP, Associated Press

Keep COVID military vaccine mandate, defense chief says

Defense Secretary Lloyd Austin is making clear he wants to keep the military’s COVID-19 vaccine mandate in place to protect the health of the troops.
1 day ago
(Photo by Bethany Clarke/Getty Images)...
Brian Fung, CNN

Released Twitter emails show how employees handled 2020 New York Post Hunter Biden story

Elon Musk teased Twitter users a few days ago with the promise of information on Twitter's content moderation policies, now known as the "Twitter Files."
1 day ago
The former Utah man and pilot, Dan Ragan....
KSL TV

Utah resident remembers pilot killed in Dallas Air Show crash

The former Utah man who tragically passed away in a deadly air show crash in Texas is being remembered by neighbors and friends. 
1 day ago
Tanner Lynn Horner, 31, a driver working for FedEx was arrested and charged in the kidnapping and k...
Tina Burnside, CNN

Texas FedEx driver is arrested in the kidnapping and killing of a 7-year-old girl

A driver working for FedEx was arrested and charged Friday in the kidnapping and killing of a 7-year-old girl who had disappeared from her home's driveway in Texas earlier this week, police said.
1 day ago
Noodle, the pug, is held....
Zoe Sottile, CNN

Noodle, the TikTok-famous ‘bones or no bones’ pug, has died

(CNN) — Noodle, the geriatric pug who captured hearts across the internet for his “bones or no bones” ritual, has died at age 14, his owner says. Jonathan Graziano, Noodle’s owner, announced that his beloved dog died on Friday, in a tearful update posted to his TikTok and Instagram. “This is incredibly sad, it’s incredibly […]
1 day ago
Rapper Takeoff with a microphone...
LEKAN OYEKANMI and JAKE BLEIBERG Associated Press

Man arrested in fatal shooting of Migos rapper Takeoff

Police in Texas have announced an arrest in last month's shooting death of the performer Takeoff. Houston police said Friday that 33-year-old Patrick Xavier Clark was charged with murder and has been arrested in connection with the rapper's death. Born Kirsnick Khari Ball, Takeoff was the youngest member of Migos, the Grammy-nominated rap trio from suburban Atlanta that also featured his uncle Quavo and cousin Offset. Police have said the 28-year-old was fatally shot outside a bowling alley after a private party. Police said Friday that the shooting followed a dispute over a game of dice, but that Takeoff was not involved and was an innocent bystander.
1 day ago

Sponsored Articles

house with for rent sign posted...
Chase Harrington, president and COO of Entrata

Top 5 reasons you may want to consider apartment life over owning a home

There are many benefits of renting that can be overshadowed by the allure of buying a home. Here are five reasons why renting might be right for you.
Festive kitchen in Christmas decorations. Christmas dining room....
Lighting Design

6 Holiday Decor Trends to Try in 2022

We've rounded out the top 6 holiday decor trends for 2022 so you can be ahead of the game before you start shopping. 
Happy diverse college or university students are having fun on their graduation day...
BYU MBA at the Marriott School of Business

How to choose what MBA program is right for you: Take this quiz before you apply!

Wondering what MBA program is right for you? Take this quiz before you apply to see if it will help you meet your goals.
Diverse Group of Energetic Professionals Team Meeting in Modern Office: Brainstorming IT Programmer...
Les Olson

Don’t let a ransomware attack get you down | Protect your workplace today with cyber insurance

Business owners and operators should be on guard to protect their workplace. Cyber insurance can protect you from online attacks.
Hand turning a thermostat knob to increase savings by decreasing energy consumption. Composite imag...
Lighting Design

5 Lighting Tips to Save Energy and Money in Your Home

Advances in lighting technology make it easier to use smart features to cut costs. Read for tips to save energy by using different lighting strategies in your home.
Portrait of smiling practitioner with multi-ethnic senior people...
Summit Vista

How retirement communities help with healthy aging

There are many benefits that retirement communities contribute to healthy aging. Learn more about how it can enhance your life, or the life of your loved ones.
Worsening US-China Trade Tensions Rattle Financial Markets