Stocks Tank as Worries Over a Possible Global Trade War Grip Wall Street
New York (Mar 2) Stocks tanked Friday, March 2, as investors reacted to both Donald Trump's plans to impose strict import tariffs on steel and aluminum and another round of hawkish testimony from Federal Reserve Chairman Jerome Powell.
The Dow Jones Industrial Average fell 321 points, or 1.3%, to 24,287, the S&P 500 slid 0.85%, and the Nasdaq slumped 0.88%, following sharp declines on Thursday, March 1, that saw the Dow tumble more than 400 points and the S&P 500 drop 1.33%.
The stocks leading the Dow lower were McDonald's Corp. (MCD - Get Report) , Boeing Co. (BA - Get Report) and Nike Inc. (NKE - Get Report) .
The Dow finished down 420 points, or 1.68%, on Thursday after Trump said the U.S. would impose tariffs next week on steel and aluminum imports.
Trump's aim to curb foreign imports and protect U.S. jobs has investors around the world deeply concerned about a global trade war, with officials in Canada, Germany and China vowing to respond in kind if Trump follows through with a formal announcement next week.
"We have felt that investors in recent weeks may have been viewing the risks around U.S. trade policy with rose-tinted glasses," analysts at ING noted. "One of those assumptions is the strength of the global economy -- and certainly, the prospect of a 'global trade war' and heightened geopolitical tensions could temper some of the optimism and see greater two-way risks to global growth."
On Friday, Trump tweeted: "When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don't trade anymore-we win big. It's easy!"
In his second day of testimony before Congress, Fed Chairman Powell suggested the central bank could hike interest rates as many as four times this year as the economy continues to improve. Most Fed-watchers have predicted three rate increases in 2018.
Beer makers, car manufacturers and mining companies expressed concern and some outrage Thursday after Donald Trump announced his intention to impose a 25% tariff on steel imports and a 10% tariff on aluminum imports.
The move was seen as an effort to protect two struggling U.S. industries that have seen significant drops in employment in recent years and came after Secretary of Commerce Wilbur Ross recommended in mid-February that the administration impose some combination of tariffs and quotas on countries across the globe exporting steel and aluminum to the U.S.
TheStreet
