U.S. Stocks, Bond Yields Fall on China's Retaliatory Tariffs
August 23 2019 - 10:12AM
Dow Jones News
By Caitlin Ostroff and Gunjan Banerji
U.S. stocks, commodities and Treasury yields faltered after
China said it would impose retaliatory tariffs on additional U.S.
products, escalating the trade tensions that have rattled markets
in recent weeks.
The S&P 500 fell 0.5% and the Dow Jones Industrial Average
lost roughly 0.4% shortly after the opening bell. The Nasdaq
Composite slipped 0.6%.
China said it plans to impose tariffs on $75 billion more in
U.S. goods, including agricultural products, apparel, chemicals and
textiles.
The country's retaliation led U.S. stock futures lower after
rising in early trading. The news also pushed yields on government
bonds lower and spurred selling in commodities markets, like oil
and copper, that are sensitive to the two countries' ongoing trade
battle.
The yield on the 10-year Treasury note pared its earlier gains
and hovered at 1.601% in recent trading, according to Tradeweb,
compared with 1.613% Thursday.
The ratcheting-up of trade tensions came ahead of a highly
anticipated speech from Federal Reserve Chairman Jerome Powell
later Friday on the future of monetary policy.
"The timing of it is remarkable," said John Brady, managing
director at futures brokerage R.J. O'Brien & Associates, of the
trade news. "It puts tariffs front and center on a very important
day for markets."
Markets will be watching for clarity from Mr. Powell and other
central-bank leaders at the Jackson Hole symposium on the
likelihood of further moves to lift a stagnant global economy.
Mr. Powell is set to speak Friday at 10 a.m. ET. Bank of England
Gov. Mark Carney will speak later in the day.
Lower interest rates would likely drive down bond yields further
and could boost equities, said Connor Campbell, a financial analyst
at Spreadex. "They're putting a lot of their eggs in a central-bank
basket, " Mr. Campbell said of stock-market investors.
Analysts said the Fed chairman will have to show he is willing
to take strong action to support the economy. Dallas Fed President
Robert Kaplan said Thursday at the gathering of central bankers
that he was open to cutting rates in September.
Though Mr. Kaplan came out in support, other officials were
split. In television interviews Thursday, the head of the Kansas
City Fed and the Philadelphia Fed pushed back against the need for
further rate cuts. In July, the Fed lowered its benchmark rate.
Friday's moves in stocks came a day after a series of weak
manufacturing data around the world raised concerns about a
possible recession, weighing on U.S. indexes.
The Stoxx Europe 600 slipped 0.2% in afternoon trade.
The WSJ Dollar Index, which measures the currency against a
basket of its peers, ticked up 0.1%.
Write to Gunjan Banerji at Gunjan.Banerji@wsj.com
(END) Dow Jones Newswires
August 23, 2019 09:57 ET (13:57 GMT)
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