The Dow Jones suffered a nauseating pounding on Friday, as the index fell 253.38 points or 0.95% to knock its value down to 26,364.82.
Friday's jobs report looks to have broken the Dow's back with little to cheer about for market bulls.
Dow Losses Pile on Amid Less-Than-Comforting Jobs Data
It was always going to be a volatile day with unemployment, non-farm payrolls, and consumer sentiment statistics leaving Wall Street awash in data. However, digging deeper, the prospect of higher trade tensions between China and the US is at the root of the Dow's sell-off.
The politically sensitive data were frankly awful. All signs now point to a potential recession in US manufacturing jobs (average hours worked dropped) and the trade balance missed expectations - again.
Trump's core political stance is restoring balance to trade with China and boosting domestic manufacturing. A nervous stock market is now expecting a further escalation in the trade war, along with tariffs on critical US household goods.
Confirming these bearish expectations for the Dow Jones, Iris Pang, an economist for ING in the Greater China area, laid out the risk-negative scenario that is now likely to play heading into the 2020 US presidential election cycle.
"We believe China's strategy in this trade war escalation will be to slow down the pace of negotiation and tit-for-tat retaliation. This could lengthen the process of retaliation until the upcoming US Presidential Election. It won't have escaped the authorities in China's attention that a full-blown trade war is unlikely to help President Trump's chances in the election."
Dow Stocks: Apple & Caterpillar Roasted, Boeing Resilient
Among the hardest hit Dow stocks was Apple, shedding more than 2.8% in anticipation of more trouble in their Chinese dealings. Caterpillar was next, down 2.4%, now that their weak sales in China look set to continue.
Boeing was arguably the most interesting development. Trade war and tariff escalation typically hit the US aerospace manufacturer extremely hard, but its stock price actually rose 0.5% on Friday.
Three straight sizeable hits to the Dow Jones clearly demonstrate wavering risk sentiment. Factor in that easing expectations - which increased slightly after Friday's jobs report - failed to boost stocks, and it's clear that Wall Street is taking this dip very seriously indeed.