Stocks sink as U.S.-China feud deepens

Escalation of the trade war heightens concerns about the already shaky economic outlook

Aug 23, 2019 @ 4:39 pm

By Bloomberg News

U.S. stocks slumped and Treasuries rallied Friday after President Donald J. Trump said he'll respond to new Chinese tariffs and blasted Federal Reserve Chairman Jerome Powell. The dollar fell.

The S&P 500 Index dropped as much as 1.7%, led by energy, technology and industrial shares, and the Dow Jones Industrial Average fell 623 points, or 2.37%.

Ten-year Treasury yields halted a two-day advance after Mr. Powell's remarks bolstered speculation that the central bank will cut rates next month.

The greenback reacted to Mr. Trump's comments that "we have a very strong dollar and a very weak Fed." Oil sank and gold surged.

[Recommended video: Schwab's Jeff Kleintop: Prep for volatility given China trade uncertainties]

In a series of tweets, Mr. Trump signaled he may escalate the trade war with China after that country's latest round of tariffs and fired off a new demand that U.S. companies seek alternatives to producing goods in China.

The escalation in the U.S.-China trade feud rekindled concerns about the outlook for economic growth, which is already looking shaky. The announcement comes as leaders from the Group of Seven nations prepare to meet in France and central bankers gather in Jackson Hole.

In his tweet, Mr. Trump also suggested that the Fed chairman could be a greater "enemy" of the U.S. than Chinese President Xi Jinping, and said he'll soon announce some related action from the White House. "As usual, the Fed did NOTHING!," Mr. Trump wrote.

[More: As market indicators go, the president trumps everything]

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