By CCN.com: The Dow sped toward another brutal loss on Thursday after Beijing bared its fangs to deliver the shellshocked Trump administration a withering rebuke that drastically reduced the likelihood of an amicable trade war resolution.
Every major US stock market index endured heavy losses on Thursday. The Dow Jones Industrial Average plunged as much as 400 points but by 11:05 am ET had trimmed its losses to 314.53 points or 1.22%. The DJIA last traded at 25,462.08.
The S&P 500 crashed 1.25% to 2,820.64, and the Nasdaq plummeted 1.48% to 7,636.14 as Wall Street choked on the latest escalation in the conflict between the United States and China.
Today, stocks fell across the board amid a rapidly-escalating US-China trade war.
Beijing intensified its hostile rhetoric when a Ministry of Commerce spokesperson condemned the US for its “wrong actions” and warned the Trump administration that China would not return to the negotiating table until the White House atoned for its transgressions.
“If the U.S. would like to keep on negotiating it should, with sincerity, adjust its wrong actions. Only then can talks continue,” spokesperson Gao Feng said Thursday in Mandarin, according to CNBC.
Earlier this week, Chinese President Xi Jinping delivered an ominous speech in which he warned China to prepare for a “new Long March” that would mire the country in “difficult situations.” However, Xi declined to lob a direct attack at the US or the Trump administration, as the Ministry of Commerce did on Thursday.
The Trump administration, as CCN.com reported, recently hiked tariffs on Chinse imports in retaliation for Beijing’s sudden change-of-heart on a draft agreement for a new trade deal. Later, the White House used a national emergency order to place controversial Chinse tech giant Huawei on a government blacklist, though it has since given US firms a 90-day window to get their affairs in order before the blacklist takes effect.
It’s unlikely that President Trump will roll back those punitive actions without key concessions from China – concessions that led Beijing to shred the draft agreement in the first place.
It’s astounding how quickly the trade war narrative has soured. A swift resolution to the conflict looked like a near-certainty just a few weeks ago; now, with tensions escalating by the day, it seems like pure fantasy to expect the two economic competitors to arrive at an agreement anytime soon.
Nomura predicts that the trade war could extend deep into the 2020 election and estimates that there is a 65% chance that President Trump slaps tariffs on $300 billion worth of Chinese goods by the end of 2019.
“The U.S.-China relationship has moved further off track over the past two weeks after a period of what appeared, on the surface, to be steady progress towards reaching an admittedly narrow agreement,” Nomura economists wrote in a note, according to Bloomberg. “We do not think the two sides will be able to get back to where they seemed to be in late April.”
Neither of those forecasts bode well for the stock market, but they’re relatively tame compared to the shocking prediction one Chinese government researcher revealed this morning. Zhang Yansheng warned that the US and China could remain locked in the trade war until 2035, forcing Wall Street to reckon with another 15 years of a crippling tariff regime.
Thursday’s sell-off shoved the Dow toward its second consecutive triple-digit decline. On May 22, the DJIA slid 100.72 points or 0.39% to settle at 25,776.61. The S&P 500 and Nasdaq also recorded losses, falling 0.28% to 2,856.27 and 0.45% to 7,750.84.
Click here for a real-time Dow Jones Industrial Average (DJIA) price chart.
This article was edited by Josiah Wilmoth for CCN.com. If you see a breach of our Code of Ethics or Rights and Duties of the Editor, or find a factual, spelling, or grammar error, please contact us and we will look at it as soon as possible.
Last modified: July 2, 2020 8:09 PM UTC