Dow sinks 500 points upon open as US, China issue new tariffs

Dow sinks 500 points upon open as US, China issue new tariffs

USA stocks traded lower on Thursday as news that President Donald Trump would propose trade duties on China imports stoked fresh fears about a potential trade war between two of the world's largest economies that could impede domestic economic expansion in roughly its ninth year.

At 9.51am ET, the Dow Jones Industrial Average dropped 0.37 per cent to 24,414.88.

The stock futures implied the S&P 500 would not only open below its 200-day moving average, a key support level watched by technical analysts, but also challenge its 2018 low from February 9.

With administration officials sounding conciliatory one day and hostile the next and the president frequently quick to fire off another tweet, investors simply don't know what the US wants to achieve in its talks with China, said Katie Nixon, chief investment officer for Northern Trust Wealth Management.

At 8:57 a.m. ET, Dow e-minis were down 459 points, or 1.91 percent. President Donald Trump has proposed more tariffs on Chinese goods. "The market has vacillated between writing it off as just talk and assuming there could be a serious problem", said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey. Caterpillar (CAT.N) declined 2.8 percent and Deere (DE.N) dropped about 2.3 percent. The yield on the 10-year Treasury fell to 2.77 percent from 2.83 percent. About 268 of the S&P 500 components were lower.

More news: Philippines to temporary shut popular tourist island

The speed with which the trade spat between Washington and Beijing is ratcheting up - the Chinese government took less than 11 hours to respond with its own measures - led to a sharp sell-off in global stock markets and commodities.

Industrial companies were especially hard hit by the escalation in trade tensions Friday.

Investors will also tune into Fed Chairman Jerome Powell's speech at an event later in the day for signs the central bank could raise rates more than the expected two more times this year. Shares of Boeing, the single largest US exporter to China, tumbled 4.6 percent. Copper fell 2 cents to $3.06 a pound.

The S&P 500 (.SPX) was down 26.29 points, or 0.99 percent, at 2,636.55 and the Nasdaq Composite (.IXIC) was down 63.26 points, or 0.89 percent, at 7,013.29.

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