Stock futures plunge, with the Dow heading for a 500 point drop, after China announces new tariffs
U.S. stock index futures tumbled ahead of Wednesday's open, as concerns over a potential trade war between the U.S. and China intensified.
Around 7:30 a.m. ET, Dow Jones industrial average futures indicated a drop of 460 points at the start of trading in New York. The Nasdaq 100 and the S&P 500 futures also indicated heavy losses at the open for their respective markets.
The moves in premarket trade come as China announced brand-new tariffs on 106 U.S. products, including cars, whiskey, aerospace and defense, and soybeans.
"I think the market is just concerned about this thing escalating right now," James Paulsen, chief investment strategist at The Leuthold Group, told CNBC's "Squawk Box." "It's not so bad if we have a few tariffs on a few products, but if it escalates worldwide, … then you're really threatening the recovery globally."
Automakers were down sharply, with Ford and General Motors off 2.5 percent and 3.3 percent, respectively. Boeing was also slammed, falling more than 4.1 percent. Caterpillar declined 2.8 percent, while United Technologies — another Dow component — fell 2.2 percent.
The move comes less than a day after President Donald Trump issued a list of Chinese imports that the U.S. administration aims to target as part of a crackdown on what the president sees as unfair trade practices.
U.S. futures extended losses following the announcement, with worries over technology and trade already putting markets on edge.
Trump tweeted later in the morning: "We are not in a trade war with China, that war was lost many years ago."
Wednesday's premarket trade paints a different picture to that of Tuesday's session, when stocks on Wall Street rose sharply to finish the day on a positive note. The Dow closed almost 400 points higher as technology rebounded from sharp losses seen in Monday's sessions.
Ahead of Friday's nonfarm payrolls, investors will digesting the latest economic news, including the ADP National Employment Report at 8:15 a.m. ET and services purchasing managers' index (PMI) at 9:45 a.m. ET.
Meantime at 10 a.m. ET, non-manufacturing ISM report on business is due as well as factory orders.
On the central banking front, the Federal Reserve Bank of Chicago's two-day annual risk conference begins. Meantime, two speeches by Fed officials are due to take place, one from St. Louis Fed President James Bullard in Arkansas, and one from Cleveland Fed President Loretta Mester in Ohio.
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I said it would happen.
What do you think the Dow is going to close at today?
He probably also said it would close higher...
It isn't the day to day that we should consider but, the overall over a period of time, say month to month. Consider, it's been almost a month now and, the Dow hit 25k, Trump crowed at that number said it was his doing, then he decided we needed a trade war with the world, since that time, the Dow hasn't seen 25k, in fact it has dropped almost 2000 points in that month, yes, it has gone up at times but, it has continued a steady trend of falling. The trade wars Trump has started will continue to hurt the market as long as he continues to fight this none war.
Do you know what you're talking about? Based upon a monthly chart of the S&P 500, not really. If you take a look at what you purport to be considering, you see that the move over the last few months amounts to a blip.
Are you an academic, or a dilettante?
Just curious...
Considering you can't do anything but, attack me on here when I provide evidence and, you provide nothing to refute it except an attempt at questioning whether I work for Wall Street or, just look at the financials in the morning says everything......about your inability to debate.
That's called a debating point, in case you were unaware. I used information that exists in order to challenge/refute your thesis.
If you're unable to respond, I understand, and am not surprised. Don't cower behind your alleged sensitivity.
I'm not "cowering" what I am doing is calling you out on your attempt to demean someone when you say you are debating them, this is the part of your comment I was referring to,
Obviously you didn't notice the drop in the stock market on Friday and, the blip today, how long do you think it will take for the stock market to fall to what it was when Obama was first elected in 2009?
So trump takes credit for the market going up for the last 13 months, but as soon as it drops because he announces a trade war? His little trumpettes run to the internet blogs to explain why trump has NOTHING to do with it.. Wish I lived in a delusional world where I could just make everything black and white and exist in my own little echo chamber. What a bunch of fucking idiots.
He patted himself on the back for no planes crashing. To bad he can't claim the same for the market.
Trump is a pro at accepting praise where he deserves none, (and demanding it from people....which is incredibly sad that his ego is that big. Seriously, how insecure do you have to be to set up pressers JUST so his staff can publicly kiss his orange ass?), and assigning blame for his fuck ups. Trump is a pathetic POS.
Yep, Mr. Frost, the thing that I have not seen from Trump is him taking any credit for this current situation with the market, in fact there has been nothing but, crickets from the White House on it since the market started falling.
Exactly correct!
It's just normal fluctuations. Obama didn't apologize for a similar dip in 2015 did he? As you can see the market had little gains in the two years pior to Trumps election.
Where did the market start at the beginning of Obama's presidency and, where was it at the end of his presidency? Seems to me you don't want to talk about that. It also seems to me that you don't want to admit that Trump has, since the beginning of Trump's presidency that he has taken credit for every rise in the market but, when it starts to fall he says nothing about it. Obama never took credit whether it rose or, fell.
HAHAHAHAHA! The GOP pushed the tax cut saying we'd get an impossible 3% economy growth and then Trump fucks them over by starting a trade war. What a marooon! I wonder what his numbers will be like should the tax cuts get swallowed by a rise in the cost of goods? Probably the same since they praised him (and the GOP) for cutting the health care mandate that added an immediate 20% to the cost of individual insurance rates. Well you never know with Trumpty Dumpty. He'll probably change his mind next week, have a news conference, blame the Democrats and then praise himself for negotiating lower trade prices that will end up being slightly higher than they were at the beginning of this fiasco. Then we'll have to hear from the same Know Nothings using it as a talking point to prop up the Hollow Dictator some more.
Lol, i'm sure it had nothing to do with five straight quarters of Fed interest rate increases right? This following nearly 30 quarters of Zero Interest Rate Policy and massive monetary prop ups by the Fed.
You may be evil but you certainly aren't a genius.
So you agree that there is no way the economy will grow the claimed 3%? Once the layoffs and bankruptcies start the Feds will have to slow, or even reverse, the federal interest rate. Again Clownshoes can't figure out how all of these pieces fit together.
Thats not what i said.
So do you agree that 30 quarters of qualitative easing, ZIRP, monetary prop ups and five quarters in a row of interest rate hikes are a major cause of current market fluctuations?
Rate hikes are part of the recent market volatility, no doubt. But only part. Every time Trump Twitter farts the markets react.
Yeah and every time a camel farts in the middle-east gas prices go up.
No doubt some react to Trumps comments like that but that is a small thing when compared to many of the other, more serious economic factors at play here.
Just what I said in the first place, glad you agree.
There are more important, see bigger, things at play that effect our economy. #1 being the seven trillion dollars we have already spent fighting "Islamic Terror" in Afghanistan and the Middle East just since 9-11-2001. What did we get for all that moolah? More terrorists and seven trillion dollars deeper in debt. We could have given everyone free healthcare and still had six trillion left over if we had just skipped Bush's wars of opportunity. Still, trade wars cost more than you indicate. Remember the oil embargo? Also, Trump and the gop have already doubled deficits...
Once again that is not what i said.
You either intentionally or obtusely left out several of the most significant factors at play for the issue at hand.
Trump farts, you jump. Hilarious!
There is plenty of blame to go around on both sides for the financial situation we are currently in. Interestingly some only point out things that get attributed largely to only one party. Thus completely invalidating their viewpoint.
You are one of those JBB. You are so far out in left field you aren't even in the ballpark anymore. The fact that you don't even recognize the major factors i've pointed out here only prove that out once again.
Yes i do but i don't think you do. The causes of which have exactly zero in common with what we are talking about here today.
As do you when you give Trump a pass on everything, thus also proving my second point. It's okay... don't worry everything will be just Trumpy in the end.
Nah, i was simply pointing out a few of the main causes for the market volatility these days. Trump not being one of them. No matter how hard you try to make it so.
Kind of off topic, but Trump is trying to screw over CPAC's plan for long term giant military bases in the ME with his announcement that he'd bring home troops within 6 months. The new announcement this morning reversed that though. We already know Bolton wants regime change in Iran and has the support of Israel and Saudi Arabia. It will be interesting to see if Mattis and Kelly keep their jobs. A long term ramp up in the military anywhere (including NG troops on the border) will add more debt to the books, but it will also shave a couple more points off the unemployment numbers.
No value [ph]
Skirting the CoC [ph]
skirting the CoC [ph]
skirting the CoC [ph]