By Barbara Kollmeyer, MarketWatch

China fires retaliatory salvo against U.S. tariffs

Stock-index futures pointed to a mixed start for Wall Street on Friday, a day after equities plunged on the prospect of a global trade war as China fired its first retaliatory salvo against tariffs of up to $60 billion announced by the Trump administration.

Investors sought shelter in gold and the Japanese yen, which was trading at its highest levels since the U.S. presidential election in 2016, after one of the worst days for Wall Street in weeks.

What are the main benchmarks doing?

Dow Jones Industrial Average futures pared an earlier loss that had reached 200 points. Dow futures were up 34 points, or 0.1%, to 23,995, while S&P 500 futures were up 6.20 points, or 0.2%, at 2,650. Nasdaq-100 futures were added 2.75 points, or less than 0.1%, at 6,693.

Major indexes saw their biggest one-day drops since Feb. 8 on Thursday (http://www.marketwatch.com/story/dow-poised-to-drop-by-more-than-100-points-2018-03-22). The Dow slid 724.42 points, or 2.9%, to end at 23,957.89, leaving it 10% below the all-time high hit earlier this year and down 3.1% for 2018.

The S&P 500 turned negative for the year, tumbling 2.5% to 2,643.69, while the Nasdaq Composite Index lost 2.4% to end at 7,166.68.

With one session left to go in this week, the Dow and S&P 500 are each down nearly 4% for the week and the Nasdaq is facing a loss of around 4.2%. That would mark the worst week for those indexes since the week ending Feb. 9, when markets were routed amid concerns over rising inflation and bond yields (http://www.marketwatch.com/story/dow-poised-to-edge-up-as-traders-lick-their-wounds-after-a-punishing-stretch-2018-02-08).

The Cboe Volatility Index jumped 31% to 23.35, returning back above its long-term average of 20 on Thursday (http://www.marketwatch.com/story/wall-streets-fear-index-jumps-20-amid-stock-selloff-2018-03-22).

What's driving markets?

China reacted to Trump administration's plans to impose tariffs on $60 billion worth of its imports (http://www.marketwatch.com/story/trumps-china-tariffs-a-fight-for-control-over-robots-wireless-other-future-technologies-2018-03-22), Beijing's commerce ministry fired back with tariffs against $3 billion in U.S. goods (http://www.marketwatch.com/story/china-plans-3-billion-in-retaliatory-tariffs-against-us-goods-2018-03-22). The Chinese move includes an initial 15% levied on fruit, nuts, wine and stainless steel pipes. A second round of 25% tariffs would be aimed at pork and recycled aluminum would be imposed after China further evaluated U.S. penalties.

Chinese Ambassador to the U.S. Cui Tiankai said on state television that the country would "fight to the end," in the case of a trade war.

China stopped short of penalties on the biggest salvos in a potential trade war, leaving off soybeans, sorghum and Boeing (BA) aircraft, indicating Beijing may be looking for leverage in any negotiations with the U.S.

In one bright spot, the White House late Thursday formally approved tariff reprieves for the European Union (http://www.marketwatch.com/story/eu-plus-six-other-nations-get-temporary-us-tariff-reprieve-2018-03-23) plus six other nations, including Canada and Mexico.

Read:Here's why the stock market took the China tariffs so hard (http://www.marketwatch.com/story/heres-why-the-stock-market-took-the-china-tariffs-so-hard-2018-03-22)

Read:Trump, Xi enter rockier phase as U.S.-China trade fight heats up (http://www.marketwatch.com/story/trump-xi-set-to-undergo-rockier-phase-as-trade-fight-heats-up-2018-03-22)

(http://www.marketwatch.com/story/trump-xi-set-to-undergo-rockier-phase-as-trade-fight-heats-up-2018-03-22)Elsewhere, President Donald Trump said on Friday he's considering vetoing the $1.3 spending bill (http://www.marketwatch.com/story/congress-rushes-to-approve-13-trillion-spending-bill-and-avoid-shutdown-2018-03-23)approved by the Senate because it did not fully fund his proposed border wall.

What are the data?

Durable-goods orders (http://www.marketwatch.com/story/durable-goods-orders-snap-back-with-31-gain-as-business-investment-surges-2018-03-23)jumped 3.1% in February, largely reversing a big drop at the start of the year and posting the largest gain since last summer.

New home sales for February are due at 10 a.m. Eastern.

Investors will also hear from a trio of Federal Reserve speakers, just two days after the central bank raised U.S. interest rates, but appeared to stick to a more cautious strategy for 2018 (http://www.marketwatch.com/story/fed-lifts-rates-in-powells-first-meeting-says-outlook-has-strengthened-2018-03-21).

Minneapolis Fed President Neel Kashkari will take part in a discussion about the economy in New York at 10:30 a.m. Eastern, Dallas Fed President Rob Kaplan will appear at the Trellis Foundation Summit at 11:30 a.m. Eastern and Boston Fed President Eric Rosengren will give a speech at the Fed's international research forum at 7 p.m. Eastern.

What are strategists saying?

"Antitrade policies, particularly tariffs, act like a tax on consumers and business by raising the cost of trade. By creating uncertainty, they also weigh on asset valuations, which could weaken households' ability to sustain spending, and they likely reduce the incentive for business to invest," said Michael Gapen, chief U.S. economist at Barclays, in a note to clients.

"For now, we are forced to say that we will have to wait and assess the response of our trading partners and the reaction of financial markets before drawing any firm conclusions for the U.S. outlook," he said Gapen.

Read:'I don't think this is a trade war,' says veteran Wall Street strategist (http://www.marketwatch.com/story/i-dont-think-this-is-a-trade-war-says-veteran-wall-street-strategist-2018-03-23)

What are other markets doing?

The ICE U.S. Dollar Index fell 0.3%, with the dollar hitting its worst levels against the Japanese yen since the election of President Trump. Investors seek out the yen and gold in times of economic and political uncertainty. Gold prices rose $21, or 1.6%, to $1,348 an ounce.

European equities were weaker across the board, while Asian markets suffered heavy losses (http://www.marketwatch.com/story/asian-markets-strengthen-after-fed-raises-rates-2018-03-21).

Oil futures rose 0.8% to $64.78 a barrel.

What stocks are in focus?

Micron Technology Inc.(MU) shares fell 4% in premarket. The company posted an earnings beat late Thursday, but also announced plans to spend money building out its fabrication sites.

Read:Micron bets that memory demand is here to stay (http://www.marketwatch.com/story/micron-bets-that-memory-demand-is-here-to-stay-2018-03-22)

Dropbox Inc. is scheduled to debut on Friday. The company priced its initial public offering at $21 a share late Thursday, above its expected range, according to The Wall Street Journal.

Nike Inc.(NKE) shares surged 4% in premarket after swinging to a fiscal third-quarter loss, but posting a beat on sales (http://www.marketwatch.com/story/nike-swings-to-loss-but-sales-beat-expectations-shares-rise-2018-03-22).

Read:Nike CEO says company has 'deep leadership bench' after reshuffle (http://www.marketwatch.com/story/nike-has-deep-leadership-bench-says-ceo-2018-03-23)

Shares of Kroger Co.(KR) and Target Corp(TGT) shot higher after reports that the two companies are in merger talks.

(http://www.marketwatch.com/story/nike-has-deep-leadership-bench-says-ceo-2018-03-23)

(END) Dow Jones Newswires

March 23, 2018 09:27 ET (13:27 GMT)

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