Stocks tumble as investors worry about US trade war with China
Stocks ended the week the way they began it: tumbling as investors worry that tariffs and harsh words between the US and China will touch off a trade war that derails the global economy.
It came with the US considering duties on an additional 100 billion dollars in goods imported from China.
The stock market changed direction again and again this week as investors tried to get a sense of whether the trade dispute between the world's two largest economies will escalate.
Technology companies, banks, industrial and health care stocks sank. The market did not get any help from a March jobs report that was weaker than expected.
With administration officials sounding conciliatory one day and hostile the next and the president frequently quick to fire off another tweet, investors simply do not know what the US wants to achieve in its talks with China, said Katie Nixon, chief investment officer for Northern Trust Wealth Management.
"The process itself seems to be quite chaotic," she said. "We're not quite sure what the long-term strategy is."
The Dow Jones industrial average dropped 572.46 points, or 2.3%, to 23,932.76. It fell as much as 767 points.
The S&P 500, which many index funds track, lost 58.37 points, or 2.2%, to 2,604.47. The Nasdaq composite slid 161.44 points, or 2.3%, to 6,915.11. The Russell 2000 index of smaller-company stocks dipped 29.63 points, or 1.9%, to 1,513.30.
President Donald Trump's administration spent the past few days reassuring investors that it is not rushing into a trade war, and China's government has done the same.
However late on Thursday, Mr Trump ordered the US Trade Representative to consider placing more tariffs on Chinese imports. China said it would "counterattack with great strength" if that happens.
Stocks dipped further after Trump criticised the World Trade Organisation on Twitter on Friday morning and the losses worsened in the afternoon.
At the start of the week, the US announced plans to put tariffs on 50 billion dollars in goods imported from China, and the Chinese government responded with measures of equal size.
Stocks plunged on Monday, but they rallied over the next few days as officials from both countries said they were open to talks and the tariffs might never go into effect.
The Dow average, which contains numerous multinational companies including industrial powerhouses Boeing and Caterpillar, swung dramatically this week, with almost 1,300 points separating its lowest point Monday afternoon from its high late Thursday. It fell 0.7% for the week.
On Friday Caterpillar, a construction equipment maker, slid 5.14 dollars, or 3.5%, to 142.99 dollars and Boeing, an aerospace company, lost 10.28 dollars, or 3.1%, to 326.12 dollars.
Among technology companies, Apple gave up 4.42 dollars, or 2.6%, to 168.378 dollars and PayPal shed 3.09 dollars, or 4%, to 73.86 dollars.
Jason Pride, chief investment officer for Glenmede's private client business, said Mr Trump's latest order caught investors off guard.
"I think it shows a willingness to go to the mat on this and fight it out," he said.
Still, Mr Pride said all of the proposed tariffs add up to a pretty small fraction of trade between the US and China, and overall, they would not affect the nation's economy that much if they do go into effect.
Ms Nixon, of Northern Trust, said businesses also support the idea of making changes in America's trade relationship with China.
Even though investors are optimistic about the state of the global economy and company profits continue to grow, Ms Nixon said the administration is creating the thing investors hate the most: uncertainty.
The government reported that US employers added 103,000 jobs in March, a weaker pace than the last few months.
The Labor Department also said fewer jobs were added in January and February than it initially estimated.
The unemployment rate remained low and the job market looks fundamentally healthy, but it is possible some employers are struggling to find workers.
Benchmark US crude dropped 1.48 dollars, or 2.3%, to 62.06 dollars a barrel in New York while Brent crude, used to price international oils, lost 1.22 dollars, or 1.8%, to 67.11 dollars per barrel in London.
Oil prices fell almost 5% this week as investors wondered if an increase in trade tensions will reduce demand for oil by slowing down the global economy.
Bond prices rose, sending yields lower. The yield on the 10-year Treasury fell to 2.77% from 2.83%. The lower yields mean banks can not make as much money from lending, and that sent bank stocks lower.
In other energy trading, wholesale gasoline dipped 3 cents to 1.95 dollars a gallon. Heating oil lost two cents to 1.96 dollars a gallon. Natural gas rose three cents to 2.70 dollars per 1,000 cubic feet.
Gold rose 7.60 dollars to 1,336.10 dollars an ounce. Silver edged up one cent to 16.36 dollars an ounce. Copper fell two cents to 3.06 dollars a pound.
The dollar fell to 106.85 yen from 107.12 yen. The euro rose to 1.2285 dollars from 1.2256 dollars.
Germany's DAX was down 0.5% while France's CAC-40 fell 0.3% lower. The FTSE 100 in Britain lost 0.2%.
Japan's benchmark Nikkei 225 index dipped 0.4% while South Korea's Kospi slipped 0.3% but Hong Kong's Hang Seng rose 1.1% after trading resumed following a holiday as investors caught up with the previous day's global gains.