Wall Street Tries to Shake Off Increasing US-China Trade Tensions

The trade war between the United States and China is starting to rear its ugly head at home with Wall Street sinking, Monday, after China retaliated with tariff ideas of their own.  Apparently, US President Donald Trump’s strategy to assuage the stubborn nation was equally belligerent and that has not only prolonged any agreement, but is now causing investors to scurry in search of a safe haven. 

Indeed, all three of the major US indexes slid, on Tuesday, after a broad sell-off. The tech-heavy Nasdaq, in fact, posted its biggest single-day percentage loss, so far, this year.  For the Standard & Poors 500 and the Dow, the percentage loss was the biggest since January 3rd.

Looking more closely at the numbers, the Down Jones Industrial Average fell more than 617 points—about 2.4 percent—to 25,324.99. Also, the Standard & Poors dropped at least 69 points—also about 2.4 percent—to 2,811.87.  Finally, the Nasdaq Composite saw the biggest loss, nearly 270 points—more than 3.4 percent—to 7,647.02.  Fortunately, utilities (.SPLRCU) was the only one of the eleven S&P 500 sectors to end the session in the black.   

In addition, China continues to demand it will impose higher tariffs on approximately $60 billion in US goods. And this is in spite of threats made by President Donald Trump that retaliating against US policy would result in even more tariffs on Chinese tariffs.  Of course, this resulted in fears of a massive global economic downshift. 

Sure enough, we can see this response from all over the market.  US Treasure yields, for example, fell to a six-week low. 10-year yields have also fallen below 3-month bill yields. That is an inversion that many view as a possible opening for definite recession. 

The stocks most vulnerable to US-China tariffs include Boeing Co (down 4.9 percent) and Caterpillar Inc (down 4.6 percent). Apple also sank nearly 6 percent suffering from both higher trade tensions as well as an antitrust lawsuit currently underway at the United States Supreme Court accusing Apple of monopolizing the whole of the iPhone app market. Also, ride share companies Uber Technologies Inc and Lyft Inc fell 10.8 percent and 5.8 percent, respectively, but those may not necessarily reflect higher tariff complications.