clear
Wednesday July 18th, 2018 10:44AM

Stocks skid as trade war worsens with new tariff threats

By The Associated Press
Related Articles
  Contact Editor

NEW YORK (AP) — Global stock indexes sank Wednesday after the Trump administration released a list of $200 billion in goods that could be hit with tariffs and China said it would retaliate. The dollar spiked and big exporters plunged.

Companies that sell computer chips, oil, basic materials and heavy machinery dropped after the Trump administration proposed a 10 percent tax on a wide list of imports. It is scheduled to make a decision on the potential tariffs after Aug. 31.

China's government said it will take "firm and forceful measures" if the new tariffs are enacted. That response would likely include measures other than tariffs. Trump has threatened to put new taxes almost everything the U.S. imports from China.

Jack Ablin, chief investment officer for Cresset Wealth Advisors, said the tariffs can have big effects: a tariff on an import from one country can lead to broad price increases for similar items, and rising taxes and costs might can companies to change their supply lines in less efficient ways.

"When you start adding all of that together, you end up with typically higher inflation and low productivity," he said. "Higher inflation tends to rob consumers of their income and lower productivity tends to rob companies of their profits."

A four-day winning streak for the S&P 500 ended as the benchmark index lost 19.82 points, or 0.7 percent, to 2,774.02. The Dow Jones Industrial Average dropped 219.21 points, or 0.9 percent, to 24,700.75. The Nasdaq composite fell 42.59 points, or 0.5 percent, to 7,716.61. The Russell 2000, an index of smaller and more U.S.-focused companies, gave up 11.96 points, or 0.7 percent, to 1,683.66.

The S&P 500 had closed at a five-month high Tuesday.

The new list of tariff targets from the U.S. Trade Representative includes vacuum cleaners, furniture and car and bicycle parts, but U.S.-branded smartphones and laptops were excluded. Still, chipmakers, which make large portions of their sales in China, slumped. Nvidia fell 2.3 percent to $247.53 and Micron Technology lost 2.8 percent to $54.18.

Construction equipment maker Caterpillar lost 3.2 percent to $136.76 and farm equipment maker Deere lost 2.2 percent to $141.42.

The ICE U.S. dollar index jumped 0.6 percent, a large move. The dollar rose sharply against the Japanese currency, increasing to 112.04 yen from 111.28 yen. The euro fell to $1.1674 from $1.1745.

The stronger dollar hurts exporters because it makes U.S. goods and commodities more expensive in other markets. Crude oil prices tumbled partly because of the rising dollar and partly because Libya said it will start exporting oil again, a move that will increase supplies.

Benchmark U.S. crude fell 5 percent to $70.38 a barrel in New York. Brent crude, used to price international oils, plunged 6.9 percent to $73.40 a barrel in London.

On Friday the U.S. and China put 25 percent taxes on $34 billion in imports. China imported only $130 billion in goods from the U.S. last year, but it could retaliate against the U.S. through other means including regulatory moves and investigations of U.S. companies.

The trade dispute stems from Washington's complaint that Beijing steals or pressures companies to hand over technology and its concerns that plans for state-led development of Chinese companies in robotics and other fields might erode American industrial leadership.

Indexes in Europe and Asia took steeper losses as investors worried the worsening trade dispute will hamper the growth of the global economy. France's CAC 40 and the DAX in Germany both lost 1.5 percent. Britain's FTSE 100 index dropped 1.3 percent.

Japan's benchmark Nikkei 225 fell 1.2 percent and the South Korean Kospi lost 0.6 percent while Hong Kong's Hang Seng shed 1.3 percent.

Airlines took sharp losses after American said it expects slower fare growth in the U.S. American Airlines slumped 8.1 percent to $35.96 and United Continental slid 3.4 percent to $68.88.

Twenty-First Century Fox raised its offer for European pay TV service Sky. Fox already owns 39 percent of Sky and wants to buy the rest, but rival Comcast has stepped in with its own bid. Fox says the new offer values Sky at $32.5 billion.

Fox lost 4 percent to $47.79. In the U.K., Sky stock fell 0.5 percent.

Bond prices moved higher. The yield on the 10-year Treasury note fell to 2.84 percent from 2.87 percent.

The dip in bond yields helped utility companies make small gains. Utility companies tend to pay large dividends, so investors who want income often buy them when bond yields fall.

In other commodities trading, gold lost 0.9 percent to $1,244.40 an ounce. Earlier this month gold hit its lowest price since early 2017. Silver fell 1.7 percent to $15.82 an ounce. Copper skidded 3.4 percent to $2.74 a pound.

Wholesale gasoline fell 4.6 percent to $2.06 a gallon. Heating oil sank 5.4 percent to $2.10 a gallon. Natural gas rose 1.5 percent to $2.83 per 1,000 cubic feet.

___

AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP His work can be found at https://apnews.com/search/marley%20jay

  • Associated Categories: Associated Press (AP), AP Business, AP Business - Economy, AP Business - Financial Markets, AP Business - Industries, AP Business - Utilities
© Copyright 2018 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
Stocks skid as trade war worsens with new tariff threats
Global stocks are lower after the U.S. threatened to put import taxes on $200 billion in exports from China and Beijing said it will retaliate
2:25PM ( 10 minutes ago )
New EPA acting chief reassures agency's staffers
The new acting head of the Environmental Protection Agency is meeting with staffers to set the way forward for the troubled agency
2:25PM ( 10 minutes ago )
No shove, but Trump body language speaks to frosty relations
He didn't shove anyone this time, but President Donald Trump's body language at NATO summit suggests his relationships with key U.S. allies aren't exactly buddy-buddy.
2:22PM ( 14 minutes ago )
Associated Press (AP)
The Latest: England kicks off vs Croatia in World Cup semis
England and Croatia's World Cup semifinal has kicked off. England got the game started at Moscow's Luzhniki stadium.
2:02PM ( 33 minutes ago )
The Latest: Questioning pact, Trump arrives at NATO dinner
NATO Secretary-General Jens Stoltenberg is sidestepping questions about whether President Donald Trump has asked his allies to double their defense spending ambitions
1:56PM ( 39 minutes ago )
Nevada execution in doubt after drug company sues to stop it
A drug company has sued Nevada over plans to use its product in a lethal injection combination never before used in the U.S.
1:46PM ( 49 minutes ago )
AP Business
ECB taking action to reduce bad loans at eurozone banks
The European Central Bank says it's taking further steps to reduce the amount of bad loans carried by banks _ a factor that hindered economic recovery and complicated debate on strengthening the setup of the euro
1:24PM ( 1 hour ago )
Trump will get red carpet treatment in UK _ and big protests
President Donald Trump will get the red carpet treatment on his brief visit to Britain beginning Thursday: Military bands, lunch with the prime minister, then tea with the queen at Windsor Castle before flying off to one of his golf clubs in Scotland
1:16PM ( 1 hour ago )
Stocks drop as trade war heats up with new tariff threats
Global stocks are lower after the U.S. threatened to put import taxes on $200 billion in exports from China and Beijing said it will retaliate
12:23PM ( 2 hours ago )
AP Business - Economy
The Latest: NATO invites Macedonia to start membership talks
The Latest: NATO invites Macedonia to start membership talks
12:32PM ( 2 hours ago )
World markets tumble as US, China clash on more tariffs
World markets tumble as US, China clash on tariffs on $200 billion more Chinese exports
5:48AM ( 8 hours ago )
Stocks tumble as Asia braces for more US tariffs on China
Asian markets tumble as U.S. prepares to hit China with tariffs on $200 billion more Chinese products
3:54AM ( 10 hours ago )
AP Business - Financial Markets
Trump claims Germany 'controlled' by Russia, Merkel differs
President Donald Trump is claiming a pipeline project has made Germany "totally controlled" by and "captive to Russia" during a combative breakfast that kicked off what was already expected to be a fraught NATO summit
12:53PM ( 1 hour ago )
Steady drum of Trump's anti-Germany remarks raises questions
Germany's export surplus, migration policies and defense spending have all been on President Donald Trump's Twitter and diplomatic hit list
11:53AM ( 2 hours ago )
Judge approves revised Weinstein Co. bankruptcy sale plan
A Delaware bankruptcy judge has approved a revised plan for the sale of the Weinstein Co., the studio forced into bankruptcy by the sexual misconduct scandal that brought down Hollywood mogul Harvey Weinstein
11:53AM ( 2 hours ago )
AP Business - Industries
The Latest: Trump joins in welcome ceremony at NATO summit
President Donald Trump is participating in a welcome ceremony with fellow NATO leaders at what's expected to be a fraught meeting of the military alliance
8:23AM ( 6 hours ago )
The Latest: Trump arrives at NATO headquarters for talks
German Chancellor Angela Merkel is defending her country's independence following comments from President Donald Trump suggesting that Berlin was operating under Russian influence
7:04AM ( 7 hours ago )
The Latest: Merkel defends Germany's independence
German Chancellor Angela Merkel is defending her country's independence following comments from President Donald Trump suggesting that Berlin was operating under Russian influence
6:57AM ( 7 hours ago )
AP Business - Utilities
New EPA acting chief reassures agency's staffers
The new acting head of the Environmental Protection Agency is meeting with staffers to set the way forward for the troubled agency
2:25PM ( 10 minutes ago )
No shove, but Trump body language speaks to frosty relations
He didn't shove anyone this time, but President Donald Trump's body language at NATO summit suggests his relationships with key U.S. allies aren't exactly buddy-buddy.
2:22PM ( 14 minutes ago )
Border Protection says NYC mayor crossed border illegally
U.S. Customs and Border Protection alleges that New York Mayor Bill de Blasio illegally crossed from Mexico into the U.S. while visiting the Texas border in June
2:19PM ( 17 minutes ago )
Twitter to remove suspicious accounts from follower counts
Twitter says it will begin removing suspicious accounts it has locked _ denying access to its owner _ from how it counts users' followers
2:15PM ( 21 minutes ago )
Top Ecuador court upholds $9 billion ruling against Chevron
Ecuador's highest court has upheld a $9.5 billion judgment against oil giant Chevron for decades of rainforest damage that harmed indigenous people
2:12PM ( 24 minutes ago )