US open: Stocks drop amid trade war concerns; Symantec tumbles
US stocks were weaker in early trade on Friday as President Trump went ahead and lifted tariffs on Chinese goods.
At 1535 BST, the Dow Jones Industrial Average was down 0.9% at 25,596.57, the S&P 500 was 1% lower at 2,841.62 and the Nasdaq was 1.2% lower at 7,815.50.
China vowed to retaliate after the US upped tariffs on $200bn of Chinese goods to 25% from 10%. China said it "deeply regrets" the move and will have to take "necessary counter-measures."
With talks between Chinese Vice Premier Liu He and US trade representatives underway again, Trump tweeted: "Tariffs will make our Country MUCH STRONGER, not weaker. Just sit back and watch! In the meantime, China should not renegotiate deals with the US at the last minute. This is not the Obama Administration, or the Administration of Sleepy Joe, who let China get away with “murder!”
Market participants were also spooked after Trump said that he was in "absolutely no rush" to finalise a trade agreement with China, prompting fears of protracted negotiations.
"The situation is getting very tricky because the hawks are strengthened on both sides and Trump is clearly escalating with his rhetoric on China (this will be seen as a humiliation) and starting the process of adding tariffs on the rest of Chinese imports," Danske Bank said.
"Our best guess is that talks will come to a halt and that the US and China could go into a war of attrition. On the US side, the hawks are now in the driver's seat, as they have a stronger case, saying that China cannot be trusted after it changed what the US viewed as a solid agreement. They may insist even more that Chinese laws change."In corporate news, Symantec shares fell nearly 15% after the software company announced late on Thursday that its chief executive had stepped down, and as its quarterly earnings and guidance disappointed."
In corporate news, Symantec shares fell nearly 15% after the software company announced late on Thursday that its chief executive had stepped down, and as its quarterly earnings and guidance disappointed.
On the upside, Viacom was trading 0.7% higher after its second-quarter earnings surpassed analysts' expectations, but revenue fell short.
Elsewhere, ride-hailing app Uber Technologies will make its debut on the New York Stock Exchange later in the day. On Thursday, the company priced its IPO at $45 a share, giving it a market capitalisation of about $75bn.
On the macroeconomic front, figures released earlier showed that US inflation ticked higher in April. The consumer price index rose 0.3% last month, with core CPI - which excludes food and energy - up 0.1%.
Pantheon Macroeconomics economist Ian Shepherdson said: "Higher gas prices lifted the headline; food prices dipped marginally. The core rose 0.138%, held down by two key components. Apparel prices fell 0.8%, following the 1.9% drop in March, which likely was attributed to a methodological change. We have no way of knowing if this spilled over into April too, but neither can we rule it out. Either way, apparel inflation is now -2.9%, much lower than implied by the lagged path of the dollar; it’s hard to see much further downside.
"Used auto prices also fell sharply, down 1.3%. We have been expecting a downshift in this component for a few months now, because it has been overshooting compared to used vehicle auction prices. The gap has now narrowed, but further declines are a decent bet."