U.S. stocks closed sharply lower on Friday, led by a selloff in industrials and financials, as investors continued to fret over an escalating China-U.S. trade fight.
The main indexes sold off in early trade following President Donald Trump’s proposal of fresh tariffs against China. The afternoon selling pressure followed Federal Reserve Chairman Jerome Powell’s speech in which he backed a “patient” approach to raising interest rates.
What are main benchmarks doing?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -1.92% fell 572.46 points, or 2.3%, to end at 23,932.76, bringing its weekly decline to 0.7%. All 30 blue-chip companies finished with losses on Friday.
The S&P 500 index /zigman2/quotes/210599714/realtime SPX -2.37% dropped 58.37 points, or 2.2%, to finish at 2,604.47, with all 11 main sectors trading in negative territory. More than 95% of S&P 500 stocks closed lower on Friday, according to FactSet. Industrial and financial stocks led the losses, down 2.7% and 2.4%, respectively. The benchmark index lost 1.4% over the week.
Meanwhile the Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP -3.02% declined 161.44 points, or 2.3%, to close at 6,915.11, leaving it with a 2.1% weekly fall.
What’s driving markets
Investors fretted over how a potential trade fight between the U.S. and China would impact domestic and global growth.
The White House, in a statement released after the market close Thursday, said that Trump asked the U.S. Trade Representative to consider an extra $100 billion in Chinese goods to face tariffs and to identify the products that could be targeted.
China’s commerce ministry responded to the latest tariff threat by saying it will respond with countermeasures if needed.
“The Chinese side will follow suit to the end, not hesitate to pay any price, resolutely counterattack and take new comprehensive measures in response,” the ministry said via its website , citing an unnamed spokesman. The statement added that China “doesn’t want” a trade war, but is not afraid to fight one.”
National Economic Council Director Larry Kudlow, appearing on Bloomberg TV on Friday, said the administration was only considering adding “tariff pressures,” and that he hoped there would be negotiations in the next couple of months.
The afternoon selling pressure followed Powell’s remarks about the state of the economy and continuing the central bank’s gradual tightening policy. Powell said it was too soon to know a trade battle would affect the economy.
Investors also digested a weaker-than-expected jobs report that showed that wage growth remains tepid.