JOHN MOORE / GETTY IMAGES / AFP
Pedagang saham membuat transaksi di menit terakhir menjelang bel penutupan di New York Stock Exchange, 27 Agustus 2013 di New York City. Indeks Dow Jones Industrial Average turun 170 poin di tengah kekhawatiran kemungkinan serangan AS terhadap Suriah.
The Dow Jones Industrial Average closed down more than 700 points, with investors fearing that trade tensions will spike between the US and China after President Donald Trump unveiled new tariffs against Beijing.
Industrial and technology companies, which depend heavily on foreign trade, took some of the worst losses with Boeing, Caterpillar and Microsoft all falling sharply.
The Dow sank 724 points, or 2.9 per cent, to 23,957. The Nasdaq lost 178 points, or 2.4 percent, to 7,166. The S&P 500 index dropped 68 points, or 2.5 per cent, to 2,643, erasing its gain for the year. It is the fifth-worst daily point drop ever for the Dow and the worst since the beginning of February.
Earlier on Thursday, Mr Trump unveiled a plan to impose up to $60bn in new tariffs on Chinese goods, as well as limiting the country's investment in the US as payback for what his administration alleges is years of intellectual property theft.
The president’s order - which report from the White House had previously suggested would be nearer $50bn - is likely to trigger retaliation by Beijing and could further stoke fears of a global trade war. Just before signing the trade action, Mr Trump said it was “the first of many” as he looks to correct what has repeatedly called “unfair” trade deals with nations around the world.
“Markets are saying that these tariffs are going to cut into the global growth story that looked pretty strong just a few weeks ago. The prospect of more tariffs is making markets very unsettled and you're going to see choppy trading until we see the effect they are having on earnings,” Jamie Cox, a managing partner for Harris Financial Group told Reuters.
Donald Trump's least presidential moments so far...
17 show all Donald Trump's least presidential moments so far...
1/17 Defending Russian President Vladimir Putin Donald Trump appeared to equate US foreign actions to those of Russian President Vladimir Putin, saying, “There are a lot of killers. You think our country’s so innocent?” REUTERS/Carlos Barria
2/17 Asked for people to 'pray' for Arnold Schwarzenegger At the National Prayer Breakfast, Donald Trump couldn’t help but to ask for prayers for the ratings on Arnold Schwarzenegger’s show to be good. Schwarzenegger took over as host of “The Apprentice” — which buoyed Mr Trump’s celebrity status years ago. AFP/Getty Images
3/17 Hanging up on Australian PM Malcolm Turnbull Early in his presidency, Donald Trump reportedly hung up the phone on Australian Prime Minister Malcolm Turnbull after the foreign leader angered him over refugee plans. Mr Trump later said that it was the “worst call” he had had so far. BRENDAN SMIALOWSKI/AFP/Getty Images
4/17 The 'muslim ban' Perhaps one of his most controversial policies while acting as president, Donald Trump’s travel ban targeting predominantly Muslim countries has bought him a lot of criticism. The bans were immediately protested, and judges initially blocked their implementation. The Supreme Court later sided with the administration’s argument that the ban was developed out of concern for US security. Bryan R Smith/Getty
5/17 Praising crowd size while touring Hurricane Harvey damage After Hurricane Harvey ravaged southeastern Texas, Donald Trump paid the area a visit. While his response to the disaster in Houston was generally applauded, the President picked up some flack when he gave a speech outside Houston (he reportedly did not visit disaster zones), and praised the size of the crowds there. AP
6/17 Called North Korean leader Kim Jong-un 'Little Rocket Man' During his first-ever speech to the United Nations General Assembly, Donald Trump tried out a new nickname for North Korea leader Kim Jong-un: Rocket Man. He later tweaked it to be “little Rocket Man” as the two feuded, and threatened each other with nuclear war. During that speech, he also threatened to totally annihilate North Korea.
7/17 Attacking Sadiq Khan following London Bridge terror attack After the attack on the London Bridge, Donald Trump lashed out at London Mayor Sadiq Khan, criticizing Mr Khan for saying there was “no reason to be alarmed” after the attack. Mr Trump was taking the comments out of context, as Mr Khan was simply saying that the police had everything under control. Getty Images
8/17 Claimed presenter Mika Brezinkski was 'bleeding from the face' Never one not to mock his enemies, Donald Trump mocked MSNBC’s “Morning Joe” co-host Mika Brzezinski, saying that she and co-host Joe Scarborough had approached him before his inauguration asking to “join” him. He noted that she was “bleeding badly from a face-lift” at the time, and that he said no.
9/17 Claiming the blame for Charlottesville was on 'both sides' Trump refused to condemn far-right extremists involved in violence at 'the march for the right' protests in Charlottesville, even after the murder of counter protester Heather Heyer AP Photo/Pablo Martinez Monsivais
10/17 Retweeted cartoon of CNN being hit by a 'Trump train' Donald Trump retweeted a cartoon showing a Trump-branded train running over a person whose body and head were replaced by a CNN avatar. He later deleted the retweet.
11/17 Tweeting about 'slamming' CNN Donald Trump caught some flack when he tweeted a video showing him wrestling down an individual whose head had been replaced by a CNN avatar. Mr Trump has singled CNN out in particular with his chants of “fake news”.
12/17 Firing head of the FBI, James Comey Donald Trump’s firing of former FBI Director James Comey landed him with a federal investigation into Russia’s meddling in the 2016 election that has caused many a headache for the White House. The White House initially said that the decision was made after consultation from the Justice Department. Then Mr Trump himself said that he had decided to fire him in part because he wanted the Russia investigation Mr Comey was conducting to stop. Getty Images
13/17 Not realizing being president would be 'hard' Just three months into his presidency, Donald Trump admitted that being president is harder than he thought it would be. Though Mr Trump insisted on the 2016 campaign trail that doing the job would be easy for him, he admitted in an interview that living in the White House is harder than running a business empire. REUTERS
14/17 Accusing Obama of wiretapping him Donald Trump accused former President Barack Obama of wire tapping him on twitter. The Justice Department later clarified: Mr Obama had not, in fact, done so. Reuters
15/17 Claiming there had been 3 million 'illegal votes' Donald Trump was never very happy about losing the popular vote to Hillary Clinton by 2.8 million ballots. So, he and White House voter-fraud commissioner Kris Kobach have claimed that anywhere between three and five million people voted illegally during the 2016 election. Conveniently, he says that all of those illegal votes went to Ms Clinton. (There is no evidence to support that level of widespread voter fraud.)
16/17 Leaving Jews out of the Holocaust memorial statement Just days after taking office, Donald Trump’s White House issued a statement on International Holocaust Remembrance Day, but didn’t mention “jews” or even the word “jewish” in the written statement. Getty Images
17/17 Anger over Inauguration crowd size Donald Trump’s inauguration crowd was visibly, and noticeably, smaller than that of his predecessor, Barack Obama. But, he really wanted to have had the largest crowd on record. So, he praised it as the biggest crowd ever. Relatedly, Mr Trump also claimed that it stopped raining in Washington at the moment he was inaugurated. It didn’t. The day was very dreary. Reuters
Under the terms of the memorandum Mr Trump signed, he will target the Chinese imports only after a consultation period, thereby giving industry lobbyists and members of Congress a chance to water down a list of proposed 1,300 products that could be targeted.
The consultation period will also give China time to respond, reducing the risk of immediate revenge from Beijing. The Chinese government has vowed to take “all necessary measures” to defend the country’s interests if Mr Trump attacks it for allegedly stealing American technology or pressuring US companies to hand it over.
“China will not sit idly to see its legitimate rights damaged and must take all necessary measures to resolutely defend its legitimate rights,” the Commerce Ministry in Beijing said in a statement on its website.
Mr Trump struck a conciliatory tone when he first began speaking at the White House’s signing ceremony, calling China “a friend” and saying he had “tremendous respect” for China's President Xi Jinping.
Peter Donisanu, an investment strategy analyst for the Wells Fargo Investment Institute, told the Associated Press that the risk of a damaging trade war is still low because the Trump administration is targeting specific goods that aren't central to China's economy. That could change if it puts tariffs on products like electronics or appliances imported from China.
“If the Trump administration really wanted to hurt China and start a trade war, then they would go after those larger sectors,” he said.
Reuters and Associated Press contributed to this report.
Trade war fears rocked Wall Street on Thursday after President Trump launched a crackdown on China.
The Dow plummeted 724 points, or 2.9%, underlining mounting concerns among investors about looming tariffs on China. It was the fifth-largest point decline in history and the market's worst day since the extreme turmoil of early February.
The S&P 500 dropped 2.5% and the Nasdaq 2.4%.
"A global trade war, whether it's real or perceived, is what's weighing on the market," said Ian Winer, head of equities at Wedbush Securities. "There's this huge uncertainty now. If China decides to get tough on agriculture or anything else, that will really spook people."
Trump announced tariffs on about $50 billion worth of Chinese imports on Thursday afternoon. It's not clear which products will be hit, but the action is aimed at curbing China's troubling theft of US intellectual property.
"We have a tremendous intellectual property theft situation going on," Trump said. He also described the US trade deficit with China as "out of control."
Related: Why Trump's tariffs on China are a big deal
China wasted little time in threatening to retaliate against the United States, underlining the risk of a tit-for-tat escalation that hurts global trade.
Beijing warned on Thursday it will "certainly take all necessary measures to resolutely defend" itself. China didn't specify how it will respond, but US crops like soybeans are likely to be in the crosshairs.
"There is a lot of panic selling," said Rich Guerrini, CEO of PNC Investments. "Are the tariffs a means of negotiating? There's a decent chance of that, but it's too early to tell."
CNNMoney's Fear & Greed Index, a measure of market sentiment, dropped further into "extreme fear." The VIX (VIX) volatility index soared 31%, though it remains well off the elevated levels of early February.
Wall Street's biggest fear is a trade war, according to a recent survey of fund managers by Bank of America Merrill Lynch. The survey, released this week, found that for the first time since January 2017 the threat of a trade war topped inflation as the biggest risk to markets.
"What does this evolve into?" asked Mark Luschini, chief investment strategist at Janney Capital. "Should it denigrate into something that impairs business sentiment, that can feed into the economy and slow job growth."
The biggest losers on the Dow on Thursday all have significant exposure to China: Caterpillar (CAT), 3M (MMM) and Boeing (BA). Each fell about 5%.
Michael Block, chief strategist at Rhino Trading Partners, said in a report that Trump's tariff plan "has markets and the world at large freaking out a little."
Related: These American companies could lose in a trade war with China
The trade crackdown is a big deal because the United States and China are the world's two biggest economies. A major slowdown in trade could darken the otherwise bright economic outlook.
China is a major buyer of US crops, and Americans purchase tons of Chinese-made products. China is also America's biggest creditor, owning more Treasuries than any other nation.
The euphoria that sent stocks skyrocketing to new heights as recently as January has disappeared. Fears about inflation and spiking bond yields caused an earthquake on Wall Street in early February. The market quickly tumbled into a correction, a 10% decline from previous highs.
But worries about inflation eventually faded, allowing the market to rebound. Now the focus is on Trump's trade agenda.
Some market analysts questioned the wisdom of broad tariffs to tackle the very real problem of intellectual property theft.
"Isn't there another way to deal with this that is more targeted?" Peter Boockvar, chief investment officer at The Bleakley Advisory Group, wrote in a report. "The American consumer again will be the pawn that pays for this."
The trade worries could prove overdone if tensions between the United States and China ease.
Initial concerns about Trump's tariffs on aluminum and steel relaxed after the administration softened its stance by offering exemptions for Canada and Mexico. The United States later granted tariff exemptions for major allies like the European Union, South Korea and Australia.
That news didn't sit well with steel and aluminum makers. U.S. Steel (X) plunged 11% and Alcoa (AA) dropped 6%.
Trade jitters weren't the only reason for the sell-off. Tech stocks remain under pressure as Facebook reels from a user data crisis. Facebook (FB), one of the most widely held stocks, lost another 2.7% on Thursday.
Bank stocks also stumbled, plunging nearly 4% as a group. Bank of America (BAC), Citigroup (C) and Morgan Stanley (MS) fell sharply.
Nervousness on Wall Street wasn't eased by the latest White House drama. The market fell further after Trump's lead lawyer, John Dowd, resigned from the president's personal legal team handling the Russia investigation.
Trump has recently taken a more aggressive stance against Special Counsel Robert Mueller. The market would probably fall sharply, at least at first, if Trump were to fire Mueller, analysts say.
Despite the market turmoil, analysts said the overall backdrop for stocks looks good. Job creation spiked to 313,000 in February, and corporate profits have surged to all-time highs.
"We have a strong economy with low unemployment. We don't see wages spiking," said PNC's Guerrini.
The S&P 500 index on Thursday turned sharply negative for 2018, erasing its year-to-date gain amid a broad downturn for Wall Street equities. The S&P 500 index had narrowly been in positive territory to start the session but a sharp decline on the back of intensifying trade-war concerns helped to push the broad-market index into into negative territory, off 1.1% for the year, joining the Dow Jones Industrial Average , which also is down by 3.1% for the year. The S&P 500 finished down 2.5% at 2,644. The Nasdaq Composite Index remains positive for 2018, up 3%, but on the session, closed down 2.4% or 178 points at 7,166. The downdraft for stocks also comes after the Federal Reserve lifted interest-rates a quarter-of-a percentage point on Wednesday, and signaled that it planned on raising rates at a more rapid clip in coming years.
by Mark DeCambre
