Dow tumbles on trade war fears

S&P 500 Bears Make Way for Bulls

Washington and Beijing's game of chicken is wearing on Wall Street.

The Dow Jones Industrial Average ended down 572.26 points (2.34 per cent) at 23,932.76 after sinking more than three per cent earlier.

US stocks dropped about 2 percent on Friday, with the Dow falling more than 570 points, as US President Donald Trump's latest tariff threat on Chinese imports fuelled increasing concern over a US trade war with China. "Tech rivalries spill into Washington MORE said that was the "potential of trade war with China" but added that he is cautiously optimistic that we will be able to work this out".

Advanced Micro Devices (AMD.O) jumped 3.2 percent after Stifel upgraded to "buy", while Micron Technology (MU.O) fell 5.3 percent after UBS started with a "sell" rating. Leading the decline were airplane giant Boeing, which fell 3.1%, and heavy-equipment maker Caterpillar, which declined 3.5%.

At the start of the week, the US announced plans to put tariffs on $50 billion in goods imported from China, and the Chinese government responded with measures of equal size. Beijing fired back hours later by threatening tariffs on $50 billion worth of U.S. goods, including cars, planes, and soybeans.

The moves follow United States tariffs that were imposed earlier this year on Chinese steel and aluminum. "The tariff threats, even if only intended as bargaining tools, will be hard to back down from if talks fail to deliver results", Capital Economics' Julian Evans-Pritchard wrote in a research note Friday. Still, Pride said all of the proposed tariffs add up to a pretty small fraction of trade between the USA and China, and overall, they wouldn't affect the nation's economy that much if they do go into effect.

"Investors breathed a sigh of relief", said Sam Stovall, chief investment strategist at CFRA Research.

It had worked up until Friday. The benchmark index in Hong Kong gained, while stocks in Japan and Korea lost 0.3%.

"We're going to need brand new, bad news on trade for the equity markets to push lower". "Nothing's happened, nothing has been executed".

He and others said investors also appeared to be reducing risk ahead of the weekend.

"Investors may be thinking that Kudlow's recommendations carry no weight with the president", Stovall said.

In U.S. economic news, the government reported that American employers added 103,000 jobs in March, below the 185,000 jobs analysts had forecast.

Wages grew 2.7 percent in March compared with a year earlier, in line with expectations.

Investors will be watching wage growth, which slowed a bit in February to 2.6%. In February, an unexpected jump in wage growth set off inflation alarm bells and caused stocks to plunge.

That has investors anxious, because the U.S. Federal Reserve continues to hike interest rates.

Average earnings also rose by $0.08 an hour and are up 2.7% over the past year.

USA government bond prices declined as global stocks rallied, lifted by bets that that negotiations would soften the blow of announced trade tariffs.

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