By CCN: The Dow and broader U.S. stock market frantically searched for a silver lining on Friday after China threatened harsh retaliation in response to a sizable tariff increase by the White House that took effect just hours ago.
All of Wall Street’s major indexes declined sharply through the Friday morning session. The Dow Jones Industrial Average fell 143.47 points or 0.56% to 25,684.89 as Wall Street grappled with a suddenly-reignited trade war. The S&P 500 slid 0.59% to 2,853.91, while the Nasdaq underperformed with a 0.69% plunge to 7,855.63.
Friday’s stock market sell-off followed a similar plunge on May 9, which saw the Dow Jones Industrial Average fell by as much as 450 points before paring losses. It closed down 138.97 points, or 0.5%, at 25,828.36.
The broad S&P 500 Index of large-cap stocks declined 0.3% to settle at 2,870.72. Most major sectors reported declines, with materials companies shouldering the heaviest losses.
Meanwhile, the technology-focused Nasdaq Composite Index declined 0.4% to 7,910.59.
The CBOE Volatility Index, commonly known as the VIX, flashed a dire warning sign on the bull market Thursday. The so-called “fear index” surged more than 20% and peaked at 23.38, its highest since early January. It would later give back all of its gains to settle in the low-19 region.
A VIX reading in the 20-25 range is consistent with the historical average. Anything above that paints an overwhelmingly bearish picture for stocks.
China has taken a hard line in its ongoing trade negotiations with the United States after President Trump threatened to impose higher import duties on Chinese goods.
According to The Wall Street Journal, China’s hardened stance surprised White House officials at a critical juncture in negotiations.
Trump’s Sunday Twitter tirade, where he threatened to impose import duties of 25% on $325 billion of Chinese goods, came after one of his top trade advisers complained that Beijing had reneged on a trade deal. China says its tone changed because the U.S. appeared ready to make important concessions.
On Thursday, a Chinese Commerce Ministry spokesperson issued the following statement, which was conveyed via the official Xinhua News Agency:
“The escalation of trade friction is not in the interest of the people of the two countries and the people of the world … The Chinese side deeply regrets the action. If the U.S. tariff measures are implemented, China will have to take necessary countermeasures.”
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Last modified (UTC): May 10, 2019 10:10