Stock Market Overview – Stock Drop on New Tariff Annoucment

Tariff announcement generates volatility
David Becker

Stock prices whipsawed with the Dow initially surging more than 300-points and then tumbling in the afternoon after US president Donald Trump said that he was announcing a new tariff on Chinese goods. Energy shares were under significant pressure as crude oil prices tumbled more than 7%. Sectors were mixed, with Utilities bucking the trend. Semiconductor stocks were also on the defensive, along with retail shares.

The divergence in US economic activity is pronounced. While jobs data continues to be strong, manufacturing data, is softening. The global economic slowdown is weighing on this space, but consumers remain active, since most people who want jobs have jobs. Thursday’s worse than expected ISM manufacturing report shed light on national industrial output. US manufacturing activity slowed to a near three-year low in July and a measure of new orders received by factories rebounded slightly, as the negative effects of a bitter trade war between the United States and China lingered.

The Institute for Supply Management reported that its index of national factory activity slipped to 51.2 last month, the lowest reading since August 2016, from 51.7 in June. It was the fourth straight monthly decline in the index. Expectations were for the ISM index would rise to 52.0 in June. The ISM survey’s new orders measure rebounded to a reading of 50.8 last month from 50.0 in June. A gauge of factory employment dropped to 51.7 from a reading of 54.5 in June.

Trump Announced Tariffs

Riskier assets whipsawed along with gold as the surprise tariffs President Donald Trump announced Thursday against $300 billion or so of Chinese goods takes the trade dispute between the two countries to a new level. The president’s announcement jolted markets, which had bounced back sharply off Wednesday’s disappointing Fed rate cut only to have their legs cut out from underneath by news of a heightened trade war. Trump’s move means that all Chinese goods entering the U.S. will be subject to some sort of duties.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.