Dow Cringes After Trump Unleashes Devastating China Rebuke

donald trump, china, dow jones
The Dow Jones struggled to recover from Wednesday's 800 point loss after China decided to get tough with Trump - again. | Source: REUTERS/Leah Millis (i), AFP PHOTO / GULSHAN KHAN (ii). Image Edited by CCN.com.

The Dow suffered a vicious setback on Tuesday after President Donald Trump unleashed a devastating tweetstorm rebuking China for its behavior throughout the trade war.

The attack, which came just as the two countries were on the cusp of resuming face-to-face negotiations following a frosty standoff, sent another chill through Wall Street.

Dow Lurches Toward Massive Setback

Wall Street’s three major indices fell in unison in the aftermath of Trump’s tweets. The Dow Jones Industrial Average slid as much as 150 points following the opening bell. The index was last down 115.09 points or 0.42% at 27,106.26, as of 9:41 am ET.

dow jones industrial average chart
The Dow endured a steep slide at the bell. | Source: Yahoo Finance

The S&P 500 teetered at 3,006.77 following a 13.98 point or 0.46% decline. Ten of 11 primary sectors fell, with real estate (+0.49%) proving to be the only bright spot.

The Nasdaq dropped 43.47 points or 0.52% to 8,249.86.

Trump: ‘We Have All the Cards,’ China Just Wants to ‘Rip Off the USA’

The Dow fell because President Trump unexpectedly lashed out at China, seething that the country doesn’t “come through” and will “always change the deal in the end to their benefit,” namely to “ripoff the USA.”

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Trump further boasted that “Our Economy has become MUCH larger than the Chinese Economy” as a result of the trade war, and he warned that the longer China waits to strike a deal, the more aggressive the White House will be in demanding concessions from President Xi Jinping and his government.

“The problem with them waiting, however, is that if & when I win [the 2020 presidential election], the deal that they get will be much tougher than what we are negotiating now…or no deal at all,” Trump said. “We have all the cards, our past leaders never got it!”

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Trump’s tweetstorm could not have come at a more awkward time for Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, who earlier today arrived in Shanghai for two days of negotiations with a team led by Chinese Vice-Premier Liu He.

China’s government has not yet responded publicly to Trump’s commentary – either directly or via a Communist Party mouthpiece – but it’s difficult to see Beijing taking the insult lying down.

Dow Recovery on the Brink as Fed Prepares to Cut Interest Rates

The Trump-triggered pullback erased the Dow’s tepid Monday gains and forced the S&P 500 and Nasdaq – each of which declined during the previous session – toward a multi-day losing streak.

Most analysts foresee stocks advancing if the Fed cuts its target interest rate this week, which the market universally expects, according to CME’s FedWatch Tool.

However, Trump’s renewed antagonism towards the world’s second-largest economy threatens to hamstring key Dow components indefinitely, greatly inhibiting the ability of the US stock market to extend its decade-long bull run even further into unprecedented territory.

Click here for a real-time Dow Jones Industrial Average (DJIA) price chart.

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