United States stocks slumped on Thursday as President Donald Trump's move to impose tariffs on up to $60 billion of Chinese imports drove fears about the impact on the global economy, fuelling the biggest percentage declines in Wall Street's three major indexes since they entered correction territory six weeks ago.
North American markets closed significantly lower on Friday, failing to bounce back from steep losses this week as concerns about the start of a potential global trade war between the world's two biggest economies intensified selling in the final hour of trading.
For the week, the Dow was down 5.67 percent, the S&P 500 was down 5.95 per cent and the Nasdaq was down 6.54 per cent, marking their biggest weekly percentage falls since January 2016. The Dow ended Thursday down 722 points, a 2.9 percent drop, and briefly fell into correction territory.
Dow Jones stocks are also reacting to developments in the Trump White House. The action came two weeks after the president announced major tariffs on steel and aluminum imports, a move that unsettled markets already nervous about rising interest rates and the prospect of inflation.
Not every company breaks out how much of its revenue comes from overseas, but FactSet estimates that 30.5 per cent of revenue at big companies in the S&P 500 comes from outside the United States.
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The drop comes amid fears of a trade conflict between the U.S. and China that is weighing heavily on investors.
The Dow is down 264.20 points, or 1.1 percent. Worst off were industrials, down 3.2 per cent, financials, down 3.1 per cent, and basic materials, down 2.9 per cent. Today, when good news is reported, the Stock Market goes down.
"The market sentiment isn't good so when they get hit with something like trade tariffs they are more susceptible to it than they would be at another time", said Callahan. Financials was the worst-performing sector in the index plunging 3.7 percent, its worst day since February 8 when it dropped 4.5 percent. The Commerce Ministry announced a list of US goods, including pork and aluminum pipe, that could be slapped with higher tariffs in response to the USA move.
Caterpillar gets about 5 percent of its revenue from China, Boeing 12 percent and Micron almost 50 percent, according to the research firm FactSet. The Federal Reserve raised interest rates, as investors expected, and said it could raise rates at a quicker pace next year. Tech shares have been under pressure lately amid a sharp decline in Facebook shares. The German DAX was down 1.77 percent and the British FTSE 100 droped.44 percent.
The Nasdaq fell -2.43% or -174.01 points at 6992.67. Brent crude, used to price worldwide oils, lost 66 cents, or 1 percent, to $68.41 a barrel in London. Gold climbed $22.50, or 1.7 per cent, to $1,349.90 an ounce and silver gained 20 cents, or 1.2 per cent, to $16.58 an ounce. "The large bearish pattern remains in place with a downside target near 2,600", writes Intinet's Frank Cappelleri.
CURRENCIES: The dollar fell to 105.70 yen from 106.10 yen. Natural gas dipped 3 cents to $2.59 per 1,000 cubic feet.