Wall Street drops on weak factory activity, tariffs on metal imports
December 2, 2019Le Fonti International – December 3rd 2019
December 4, 2019The Dow Jones industrial average tumbled more than 400 points Tuesday after President Trump said that he has “no deadline” to end the trade war with China and that it could drag on beyond the 2020 election.
“In some ways, I like the idea of waiting until after the election for the China deal,” Trump told reporters in London, where he was due to attend a NATO summit. “But they want to make a deal now, and we’ll see whether or not the deal’s going to be right. It’s got to be right.”
The remarks raised doubts about the chances for Trump’s “phase one” trade agreement with China, which among other things would include more Chinese purchases of US crops and tighter intellectual-property protections for US films and technology.
Administration officials had signaled could be signed as soon as this month.
“Concerns are mounting that if the trade `truce’ is broken, the US economy, which has been showing signs of gaining strength despite the weaker manufacturing data, will weaken,” Quincy Krosby, chief market strategist at Prudential Financial, told The Post.
Fears of a trade-deal delay sent the stock markets reeling, with the Dow plunging more than 430 points Tuesday morning, off 1.5 percent, to 27,354.95.
The S&P 500 fell more than 37 points, off 1.2 percent, 3,077.28. And the Nasdaq Composite sank more than 100 points, off 1.3 percent, to 8,460.40.
“There’s no doubt President Trump spooked the market,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. “The real question is if he’s bluffing.”
Cardillo, who believes a trade deal will be reached by the end of the year, nonetheless agreed the president’s posturing could put the world’s two largest economies “on a slippery slope.”
He noted that the US is set to impose new tariffs on China on Dec. 15 and that they’ll ultimately be passed on to US consumers in the form of price increases.
“So far, US consumers are feeling good,” Cardillo said. “But new tariffs could really hurt their pocketbook, and that would hurt the economy.”
Later on Tuesday, Commerce Secretary Wilbur Ross reinforced Trump’s remarks, noting that putting off a China trade deal could dampen Beijing’s ability to pressure the US going into the election.
“Once it occurs and he’s back in,” Ross said on CNBC, “that’s no longer a distraction that can detract from our negotiating position.”
Ross added that trade talks at the staff level are continuing between the two countries — even though no high-level discussions are scheduled before the Dec. 15 deadline.
The US currently has tariffs on more than $500 billion in goods from China, while Beijing has duties $110 billion in products from the US.
Source: https://nypost.com/2019/12/03/dow-drops-400-points-after-trump-says-trade-war-could-drag-on/
