Stocks Dip after Thursday’s Rally with Trade War Fears Driving Losses
Stock markets fell on Friday as trading began after worry escalated over the ongoing trade way between China and the United States.
Quick overview
- All three major stock indices fell on Friday, driven by fears over the ongoing China-U.S. trade war.
- The Dow Jones, S&P 500, and Nasdaq Composite all experienced declines, impacting notable stocks like AMD, GS, and MSFT.
- China's tariffs and the U.S. military's reliance on rare earth metals have heightened tensions between the two nations.
- JPMorgan Chase's CEO expressed concerns about potential business collapses, reflecting broader economic worries despite recent bank earnings.
All three major stock indices fell on Friday as the market opened, following Thursday’s upward shift with a downtrend led by fear over the China-U.S. trade war.
The Dow Jones slipped 0.65% on Friday, while the S&P 500 fell 0.63%. The Nasdaq Composite likewise fell, losing 0.47% in a clean downward sweep of the market that pulled down such notable stocks as Advanced Micro Devices (AMD), Goldman Sachs (GS), and Microsoft (MSFT). The decline is attributed in part to the ongoing trade war between China and the United States as the two nations fight over tariffs.
As China and the United States fight about tariffs, the stock market is taking a hit. China’s Ministry of Commerce says that the U.S. is creating panic over how China is controlling the supply of rare earth metals. These are metals that the U.S. military uses to make its tools, and there is strong disagreement between the two countries about how those metals should be taxed.
China’s decision to impose these tariffs came just before a meeting with President Donald Trump and directly after Trump threatened to increase tariffs on Chinese goods by 100%. The two sides have gone back and forth over tariffs for the past few weeks, with no end in sight, and the stock market is feeling the impact.
Banks Worry about Economic Collapse
Multiple banks issued their quarterly reports this week in the largest week for bank earnings statements. These included Goldman Sachs, JPMorgan Chase, and others. In most cases, the banks beat earnings expectations given by Wall Street and impressed with profits and growth. However, we saw only minor stock market growth from many of these, with some bank stocks even dropping after impressive earnings statements.
Now, days after the banks released those earnings reports, several of them are speaking out about their economic concerns. The CEO of JPMorgan Chase Jamie Dimon said that he expected several businesses to collapse after car lender Tricolor Holdings and auto parts manufacturer First Brands both closed their businesses.
Dimon propounded on the cockroach theory that when one business falls, it can have dire consequences for another. He said that there may be other businesses collapsing very soon as a result.
On the European market, there was heightened concern over bank credit dropping. The private credit market could be in a dangerous place, and those concerns drove European stocks downward on Friday as trading began. We also saw much of the U.S. stock market dip on Friday morning, with only a few bright spots, including the steadily climbing Nvidia (NVDA).
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