Economy

Dow drops 500 points on news of steel, aluminum tariffs

Dow drops 500 points on news of steel, aluminum tariffs

Investors have a different impression. Markets tumbled from Asia to Europe, where the president of the European Union's governing body promised retaliation if Trump follows through.

The Standard & Poor's 500 index was up 3 points, or 0.1 percent, to 2,717. That could easily upset markets, which had been enjoying a remarkably smooth ride a year ago. The Dow is up 1.25 percent this year.

Overall the Dow .DJI lost 343.7 points, or 1.4 percent, the S&P 500 .SPX 29.03 points, or 1.1 percent and the Nasdaq Composite .IXIC 77.10 points, or 1.1 percent. And U.S. companies are heavily reliant on global trade, which means investors in U.S. stocks have only recently begun feeling the full benefit. USA shares were set to drift lower, with Dow futures down 0.4 percent and S&P 500 futures 0.3 percent lower. That means Apple and other big USA companies are dependent on customers not only in Peoria but also Paris and Peru. "Powell erred to the hawkish side and had speculation running rampant that the Feds will trigger quicker pace of interest rate increases as the economy accelerates", said Stephen Innes, head of trading at Oanda.

Stocks of smaller US companies, which tend to do more of their business at home, did much better than the rest of the market. Eastern time. If it ends up falling 1 percent, it would be the fourth straight day where the index has dropped by that amount. Concerns about the possibility of higher inflation and interest rates have rocked markets since the S&P 500 set its latest record high in late January. It was a continuation of the remarkably smooth rise that investors enjoyed in 2017. Higher rates make bonds more attractive as investments and can divert buyers away from stocks. Some investors took that as a signal that the Fed may get more aggressive, which sent stocks down and Treasury yields higher.

On Tuesday, Powell gave an upbeat view on the US economy and said data had strengthened his confidence on inflation.

Steel, aluminum tariffs to cover all U.S. trade partners: Ross
In a tweet on Saturday, Trump went on the offensive, threatening the European Union with a tax on its automobile imports. But Secretary of Commerce Wilbur Ross said Friday that a potential price hike on certain goods "doesn't mean anything".

The tariffs could dampen profits for everything from vehicle makers to beer companies and result in higher prices for consumers.

The yield on the 10-year Treasury note sank to 2.81 percent from 2.86 percent late Wednesday.

SHARP BITE: Patterson Companies fell to the biggest loss in the S&P 500 after it reported weaker earnings for the latest quarter than analysts expected and said that its chief financial officer was leaving. The Nasdaq fell 12 points, or 0.2 percent, to 7,260.

Expect even more swings in coming weeks and months, said Brian Peery, portfolio manager at Hennessy Funds.

Celgene fell about 7 percent after USA health regulators rejected the company's application seeking approval of a key multiple sclerosis drug.

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The dizzying result marked a sharp turnaround from the market's blistering start to the year, when stocks jumped on expectations that corporate profits would keep rising and the global economy would keep strengthening. The Standard & Poor's 500 index erased almost all of its gains for the year.

Japan's benchmark Nikkei 225 lost 2.8 percent to 21,109.44 and South Korea's Kospi slid 1.5 percent to 2,391.81. The FTSE 100 in London gave up 1.2 per cent.

COMMODITIES: Benchmark U.S. crude fell 47 cents to $60.52 per barrel. Brent crude, the global standard, rose 17 cents to $64.00 a barrel.

Gold rose $15.10, or 1.2 percent, to $1,320.30 per ounce. Investors are trying to figure out how many times the Federal Reserve will raise interest rates this year in the face of a growing economy.

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The EU, next week, will set out its own negotiating guidelines on a post-Brexit trade agreement. Parliament, "No U.K. prime minister could ever agree to it".