Stock market volatility returned with a vengeance Friday on worries that U.S.-China trade differences will put the brakes on global growth.
The Dow Jones industrial average dropped 330 points before clawing back to a 98-point loss, closing Friday at 26,485. The wild day followed tariff threats and hardball statements by President Trump that he would be “taxing the hell out of China” if the Asian economic rival does not make a trade deal with the United States.
It was the worst week of 2019 for stocks. The Standard & Poor’s 500-stock fell 21 points to close at 2,932, a drop of 0.73 percent on the day. The tech-heavy Nasdaq composite index fell 107 points, 1.32 percent, to close at 8,004 as markets headed into the weekend.
Nothing was spared. Software, chip stocks and the big technology names such as Microsoft and IBM, Intel, Salesforce and Oracle all declined on concerns over China and world trade. Investors fled to the safety of long bonds. The yield on the closely watched 10-year Treasury stayed beneath 2 percent and dipped to its lowest point in about three years.
In early 2018, the White House pivoted sharply away from its tax cut push and took initial steps toward launching a global trade war. These changes coincided with the departure of some top White House economic advisers and elevated others who were more supportive of Trump’s adversarial approach. Though the stock market has had peaks and valleys since then, it is essentially in the same place it was when the trade wars began in early 2018.
The big drags on the Dow were companies most vulnerable to a closure in Chinese markets. Cisco finished down 3.86 percent, followed by Dow Inc. at 2.67 percent, footwear giant Nike at 2.38 percent, Apple at 2.12 percent and Caterpillar at 1.77 percent. The blue chips are still way up for 2019, at 13.5 percent gain, heading into what has historically been one of the worst months of the year for stocks.
The stock skid came despite a good jobs report Friday and a quarter-point rate cut by the Federal Reserve on Wednesday, both of which are seen as positive for the economy. But Trump’s Thursday afternoon tweets threatening more tariffs on China brought the midsummer feel-good vibe crashing down.
Asian markets finished mostly down on Friday, led by a 2.35 percent decline in the Hong Kong Hang Seng Index. European markets were down across the board, led by France’s CAC 40 at a nearly 3.6 percent drop.
Friday’s losses pushed the Dow’s decline down more than 3 percent since hitting its all-time high of 27,359.16 more than two weeks ago. The Dow has lost more than 800 points since July 15.
“Just when you thought politics, tariffs and interest rates couldn’t merge any more, the Fed announces a modest cut and the president ratchets up trade tariffs,” said Nancy Tengler of Tengler Wealth Management. “We will likely enter a period when bad news will be good news again, but strap in for a volatile August.”
Oil prices recovered Friday from steep losses the previous day on Trump’s tariff threats. West Texas Intermediate oil was up $1.25 to $55.23 per barrel on Friday, a gain of 2.37 percent. The price had fallen 8 percent on Thursday.
“There was obviously some panic-selling” on Thursday, said John Kilduff of Again Capital. “But the tariff threat is weeks away and could easily be defused before the Sept. 1 deadline.”
Staff writer Damian Paletta contributed to this report.