US STOCKS-Trump comments on China spook Wall Street

Reuters

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    * Indexes down: Dow 1.90%, S&P 1.94%, Nasdaq 2.33%
    * China unveils retaliatory tariffs on U.S. goods
    * Powell says will "act as appropriate" to support growth

 (Updates to early afternoon)
    By Akanksha Rana and Medha Singh
    Aug 23 (Reuters) - U.S. stock indexes slumped nearly 2% on
Friday after President Donald Trump told U.S. companies they
should look for ways to close their China operations, following
Beijing's announcement that it would impose retaliatory tariffs
on U.S. goods.
    Trump's assertion that the U.S. would be "far better off"
without China wiped out what would have been Wall Street's first
weekly gain since July, while also knocking back the impact of a
speech by Federal Reserve Chief Jerome Powell supporting further
cuts in interest rates.
    China had earlier hit back with tariffs on U.S. goods worth
$75 billion including agricultural products, crude oil, small
aircraft and cars. Tariffs on some products would take effect on
Sept. 1 and others on Dec. 15.  urn:newsml:reuters.com:*:nL2N25J0XP
    "It (Trump's tweet) has certainly heightened concerns about
trade and its drag on global growth," said Craig Bishop, lead
strategist of fixed income group, RBC Wealth Management at 
Minneapolis.
    "It has heightened chances of a recession. The President is
his own worst enemy when he tries to manage both fiscal and
monetary policies."
    Trump also reacted furiously to Powell linking the trade war
to risks to the U.S. economy.  urn:newsml:reuters.com:*:nL2N25J107
    All the major S&P subsectors were in the red, with
tariff-sensitive sectors such as technology  .SPLRCT ,
industrials  .SPLRCI , energy  .SPNY  and materials  .SPLRCM 
selling off the most.
    Apple Inc  AAPL.O , which has borne the brunt of the recent
developments in the tariff war, was down 4%, weighing the most
on Dow. Chipmakers, which rely heavily on China for their
revenue, also took a hit, with the Philadelphia chip index
 .SOX  sliding 3.6%.
    At 1:06 p.m. ET, the Dow Jones Industrial Average  .DJI  was
down 499.75 points, or 1.90%, at 25,752.49, the S&P 500  .SPX 
was down 56.77 points, or 1.94%, at 2,866.18. The Nasdaq
Composite  .IXIC  was down 186.17 points, or 2.33%, at 7,805.22.
    U.S. stocks had earlier recovered after Powell said the
central bank would "act as appropriate" to keep the current
economic expansion on track, supporting bets on a further
decline in key borrowing costs.  urn:newsml:reuters.com:*:nN9N23A02K
    With a spike in trade tensions, traders have revived
expectations of a more aggressive 50 basis point rate cut by the
Fed in September, according to CME Group's FedWatch tool.  MMT/ 
    "Interest rate cuts, while they help the economy, they're
not going to be enough to offset a major global trade war. It
seems that's the direction we're heading in," said Michael
O'Rourke, chief market strategist at JonesTrading in Greenwich,
Connecticut.
    Shares of Bunge Ltd  BG.N  fell 2.8%, while those of Archer
Daniels Midland Co  ADM.N  were down 1.4%, after China said it
would impose an extra 5% tariff on U.S. soybeans and additional
10% duties on U.S. wheat, corn and sorghum.  urn:newsml:reuters.com:*:nL4N25J3C3
    Among the few bright spots, cloud-based service provider
Salesforce.com Inc  CRM.N  gained 2.9% after it forecast
full-year revenue above estimates, while income-tax filing
software company Intuit Inc  INTU.O  rose 2.9% after its
quarterly revenue beat expectations.  urn:newsml:reuters.com:*:nL4N25I49X
    Declining issues outnumbered advancers for a 4.07-to-1 ratio
on the NYSE and a 4.40-to-1 ratio on the Nasdaq.
    The S&P index recorded 33 new 52-week highs and 25 new lows,
while the Nasdaq recorded 36 new highs and 120 new lows.

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S&P 500 drops 1% after Trump threatens to counter China tariffs 
  https://tmsnrt.rs/2Zh1Y6Q
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 (Reporting by Akanksha Rana, Medha Singh, Sruthi Shankar in
Bengaluru, Richard Leong in New York; Editing by Saumyadeb
Chakrabarty and Shounak Dasgupta)
 ((akanksha.rana@thomsonreuters.com; within U.S. +1 646 223
8780, outside U.S. +91 80 6749 1130))

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