White House Confirmation Tariffs Will Take Effect Leads To Downturn On Wall Street

After showing a strong move to the upside early in the session, stocks came under pressure over the course of the trading day on Friday. The major averages pulled back well off their early highs and into negative territory.

The major averages finished the day just off their lows of the session. The Dow slid 337.47 points or 0.8 percent to 44,544.66, the S&P 500 fell 30.64 points or 0.5 percent to 6,040.53 and the Nasdaq dipped 54.31 points or 0.3 percent to 19,627.44.

For the week, the Dow rose by 0.3 percent, but the S&P 500 slumped by 1.0 percent and the Nasdaq tumbled by 1.6 percent.

Stocks showed a notable move to the downside in afternoon trading after White House press secretary Karoline Leavitt confirmed President Donald Trump’s threatened tariffs will be levied against major U.S. trading partners beginning Saturday.

Leavitt said the Trump administration will be implementing 25 percent tariffs on Mexico and Canada as well as a 10 percent tariff on China.

The White House press secretary said the tariffs were being imposed in response to the illegal fentanyl the countries have “sourced and allowed to distribute into our country, which has killed tens of millions of Americans.”

The news the tariffs will be implemented led to concerns about higher inflation keeping the Federal Reserve on hold for longer.

Earlier in the day, stocks benefited from a positive reaction to earnings news from Apple (AAPL), which reported fiscal first quarter results that exceeded analyst estimates on both the top and bottom lines.

Shares of Apple pulled back well off their best levels as the day progressed, however, with the tech giant falling by 0.7 percent after surging by as much as 4.0 percent.

Buying interest was also generated in reaction to a closely watched Commerce Department report showing consumer prices in the U.S. increased in line with economist estimates in the month of December.

Meanwhile, a slump by shares of Chevron (CVX) weighed on the Dow, with the energy giant plunging by 4.6 percent after reporting weaker than expected fourth quarter earnings.

Sector News

Oil stocks moved sharply lower over the course of the session, dragging the NYSE Arca Oil Index down by 2.9 percent. The plunge by Chevron weighed on the sector along with a decrease by the price of crude oil.

An increase by treasury yields also weighed on housing stocks, as reflected by the 2.6 percent slump by the Philadelphia Housing Sector Index.

Natural gas, steel and transportation stocks also saw considerable weakness, while significant strength remained visible among networking stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Friday. Japan’s Nikkei 225 Index edged up by 0.2 percent and Australia’s S&P/ASX 200Index climbed by 0.5 percent, while South Korea’s Kospi slid by 0.8 percent.

Meanwhile, the major European markets all moved modestly higher on the day. While the U.K.’s FTSE 100 Index rose by 0.3 percent, the French CAC 40 Index inched up by 0.1 percent and the German DAX Index closed just above the unchanged line.

In the bond market, treasuries slid firmly into negative territory after showing a lack of direction early in the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.7 basis points to 4.569 percent.

Looking Ahead

The Labor Department’s monthly jobs report is likely to be in the spotlight next week, while reports on job openings and manufacturing and service sector activity may also attract attention.

Reaction to earnings news from a slew of big-name companies, including Alphabet (GOOGL), Amazon (AMZN), Pfizer (PFE) and Disney (DIS), may also impact trading.

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