Dow sinks 500 points upon open as US, China issue new tariffs

S&P 500 Bears Make Way for Bulls

Fears of a trade war since Trump announced tariffs on steel and aluminium imports more than a month ago have kept investors on edge over concerns that such protectionist measures would hit global economic growth. That came with the US considering duties on an additional $100 billion in goods imported from China.

The return of market volatility, fears of a trade war and the recent underperformance of some of the major indices' largest components have been a drag on stocks overall.

Advanced Micro Devices (AMD.O) jumped 3.2 percent after Stifel upgraded to "buy", while Micron Technology (MU.O) fell 5.3 percent after UBS started with a "sell" rating.

With administration officials sounding conciliatory one day and more hostile the next and the president always quick to fire off another tweet, investors simply don't know what the US wants to achieve, said Katie Nixon, chief investment officer for Northern Trust Wealth Management.

"Markets are forced to confront the idea that rates are going up and the stock market is not going to derail that process", McMillan said. "We're not quite sure what the long term strategy is".

Share prices on Wall Street tumbled on Friday, with the Dow Jones Industrial Average falling more than 500 points.

Friday's losses wiped out gains for the week, and the Dow sank back into correction territory - 10 percent below its all-time closing high in January.

The Dow average, which contains numerous multinational companies including industrial powerhouses Boeing and Caterpillar, has swung dramatically this week, with about 1,300 points separating its highest and lowest marks. The Nasdaq composite slid 161 points, or 2.3 percent, to 6,915.

In Europe, the Stoxx Europe 600 Index fell 0.4 per cent, paring a weekly gain to 1.1 per cent, while The MSCI All-Country World Index fell 1.2 per cent. Beijing fired back hours later by threatening tariffs on $50 billion worth of U.S. goods, including cars, planes and soybeans.




"The market is getting more concerned about the possibility of a trade war between the USA and China", said Tom Cahill, portfolio strategist at Ventura Wealth Management.

Trump late Thursday threatened to slap $100 billion more in tariffs on Chinese imports, while Beijing said it was fully prepared to respond with a "fierce counter strike". China earlier said no talks were ongoing.

"The market has vacillated between writing it off as just talk and assuming there could be a serious problem", said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey.

Stocks dipped further after Trump criticized the World Trade Organization on Twitter Friday morning and the losses worsened in the afternoon. We were badly represented.

Benchmark U.S. crude dropped $1.48, or 2.3 per cent, to $62.06 a barrel in NY while Brent crude, used to price worldwide oils, lost $1.22, or 1.8 per cent, to $67.11 per barrel in London.

Kudlow, speaking to reporters shortly after the markets opened, said, "Now, we're not running a trade war".

"As no one came out to pull this back, there was a gradual realization that this was something that might be a little more serious", said Brad McMillan, chief investment officer for Commonwealth Financial Network. It fell 0.7 percent for the week.

"It shows a willingness to go to the mat on this and fight it out", he said. He noted that the US hasn't entered a full-blown trade war since 1930, and trade relationships were much different back then.

Around two-thirds of the time, the descending triangle patterns result in lower prices.

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