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Stocks fall as China puts tariffs on US goods

05 April, 2018, 02:02 | Author: Shawna Walton
  • Sight for Sore Eyes       The start of April may be a welcomed change for Asian investors after a rocky March              Source Bloomberg

China announced before markets opened Monday that it would impose a 15 percent tariff on more than 120 goods imported from the US, including pork, fruit and nuts.

The Dow Jones industrial average shed 458 points, or 1.9 percent, while the S&P 500 dropped 2.2 percent to head back into correction turf, down 10 percent from its record high on January 26. The Dow Jones industrial average rose 1.6 percent to 24,033.36.

USA stocks rose on Tuesday as technology shares recovered from a sharp selloff a day earlier, helping the S&P 500 and the Dow stay above an important technical level.

Gains in Tokyo stocks came despite a Bank of Japan survey showing the first softening of business sentiment among Japan's big manufacturers in two years, with the materials sector most directly affected by USA trade tariffs showing the sharpest declines.

The Nasdaq composite gained 71.16 points, or 1 percent, to 6,941.28. Losses were widespread across all 12 sectors of the market, with consumer goods (2.8 percent), technology (2.4 percent) and financials (2.1 percent) taking the hardest hits. Stocks across the world have been far more volatile in 2018 than in 2017, when USA markets saw a major boost in value during Trump's first year. Starting Monday, China is increasing the tariff rate on eight imported USA products, including pork, by 25 percent.

We've been warning since early this year that stocks were getting ahead of themselves.

With many global markets closed for Easter, trading volume was fairly light in the morning but picked up in the afternoon as investors began unloading their holdings, said JJ Kinahan, chief markets strategist for TD Ameritrade.

The Dow is down 69.75 points, or 0.3 percent.

That deflated some previously high-fliers including Amazon, Microsoft and Facebook.

Big-name tech companies like Microsoft fell more than the rest of the market Monday.

Energy companies skidded as benchmark USA crude lost $1.93, or 3 percent, to $63.01 a barrel in NY.

Stocks slipped into the red for a brief period after President Donald Trump's latest attack on Amazon but then quickly recovered.

Home builder Lennar and motor vehicle retailer CarMax were among the best performers in the S&P 500 after reporting earnings.

However, lingering concerns about a potential trade war between the United States and China helped to keep buying interest somewhat subdued.

In the cash market, the benchmark S&P 500 Index settled at 2640.87, up 2.0%. Stocks are coming under pressure from worries over an escalating tariff fight with China and the persistent declines in the tech sector, which has been a key performance leader in the bull market and is widely owned by both big and small investors.

US crude fell $1.81 to $63.13 per barrel and Brent was last at $67.88, down $1.46 on the day. The yield on ten-year US Treasury bonds also jumped 2 basis points to 2.75%. CBS rose 2.5 percent.

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