NEW YORK, May 7 — Wall Street stocks dropped again early today as the latest flare-up in US-China trade tensions dampened hopes for a speedy resolution to the months-long fight.
About 15 minutes into trading, the Dow Jones Industrial Average had lost 1.0 per cent to 26,172.42.
The broad-based S&P 500 fell 1.1 per cent to 2,900.19, while the tech-rich Nasdaq Composite Index declined 1.2 per cent to 8,029.78.
Hopes that Beijing and Washington could seal a trade deal took a hit over the weekend when President Donald Trump threatened to raise tariffs on Chinese imports as of Friday.
Stocks fell sharply early yesterday, although they recovered much of the declines later in the day as investors viewed Trump’s remarks as part of a bargaining strategy.
That cautious optimism evaporated late yesterday, when US Trade Representative Robert Lighthizer accused China of reneging on past commitments in the lengthy talks, and confirmed tariffs already in place would more than double to 25 per cent Friday.
The renewed tensions raised speculation Beijing would cancel this week’s talks, however, officials in China said Vice Premier Liu He would indeed make the trip.
But the dust-up has shaken market confidence in the inevitability of a deal.
“The stock market will go down big, and stay down for a while, if a trade deal with China falls by the wayside and higher tariff rates become entrenched,” said analyst Patrick O’Hare in a note on Briefing.com.
“The rebound off yesterday’s lows was proof that the market isn’t expecting that to be the outcome.”
Anadarko Petroleum advanced 0.2 per cent after announcing that it favoured a higher bid from Occidental Petroleum to its deal with Chevron. Anadarko said it would cancel the Chevron bid, although it signalled it would also consider another bid from Chevron.
Occidental rose 0.4 per cent, while Chevron shed 1.2 per cent. — AFP
