US stocks tumbled Friday as Wall Street anxiously awaited for President Trump to announce his next economic salvo against China.
The Dow Jones industrial average slid as much as 368.97 points, or 1.4 percent, to 25,031.67 ahead of Trump’s 2 p.m. news conference, where he’s expected to detail the US response to China’s recent crackdown on Hong Kong.
The S&P 500 also dropped as much as 1 percent by the early afternoon, while the Nasdaq was roughly flat as of 1:42 p.m. as tech firms such as Amazon and Tesla held up in choppy trading.
Trump’s announcement is expected to add heat to the simmering battle between the world’s two largest economies while throwing some cold water on the stock market’s recent rally.
“There’s a fear that it leads to a mounting escalation of tensions between the US and China,” said Quincy Krosby, chief market strategist for Prudential Financial. “The concern is that this could lead to an abrupt shutdown of the phase-one trade agreement.”
It’s uncertain what measures Trump will announce, but they may have to do with Hong Kong’s special status as a trading partner with the US. That status is in jeopardy because Secretary of State Mike Pompeo determined this week that the territory was no longer sufficiently autonomous from China.
“A tit-for-tat response is expected and eventually all these punitive actions will start to weigh down on the global economic recovery,” Ed Moya, senior market analyst at OANDA, said in a commentary.
Wall Street has staged a comeback from its coronavirus-fueled crash over the past two months as states started to ease lockdowns aimed at getting the pandemic under control. The S&P closed Thursday just 10.7 percent below its all-time high reached in February.
While investors had largely shrugged off the growing tensions between Washington and Beijing in recent weeks, Friday promised significant concrete action from the Trump administration rather than just more heated rhetoric.
“When [Trump] sets an appointment to tell the world what he’s going to do or not do, I think that makes a difference,” said Gerald Sparrow, chief investment officer of the Sparrow Growth Fund.
With Post wires