Renewed trade tensions send stocks lower

Dow rebounds 389 points from Monday losses

The president's top economic adviser said the USA and China are holding "back-channel discussions" to resolve an escalating trade dispute that has unsettled global financial markets.

At 9.51am ET, the Dow Jones Industrial Average dropped 0.37 per cent to 24,414.88. The NASDAQ and the S&P 500 also reversed their morning declines to close the day up 1.45% and 1.16% respectively.

With administration officials sounding conciliatory one day and hostile the next and the president frequently quick to fire off another tweet, investors simply don't know what the USA wants to achieve in its talks with China, said Katie Nixon, chief investment officer for Northern Trust Wealth Management.

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VMS Eve , with its precious cargo slung underneath, took off from the Mojave Air and Space Port at 8:02 a.m. Data review to come, then on to the next flight. "Space feels tantalizingly close now", he added.

The Dow fell 588 points, or 2.4 percent, at 23,909. President Donald Trump has proposed more tariffs on Chinese goods.

Omar Aquilar, Chief Investment Officer at Charles Schwab in San Francisco, said equity investors may have reacted too soon as fixed income and currency markets appeared unperturbed by the exchange between China and the United States. Caterpillar (CAT.N) declined 2.8 percent and Deere (DE.N) dropped about 2.3 percent. Technology companies, banks, industrial and health care stocks sank. "We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S. Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion". It fell 0.7 percent for the week. While the annual growth in average hourly earnings rose to 2.7 percent, it stayed below the 3-percent that economists estimate is needed to lift inflation toward the Federal Reserve's 2-percent target.

Industrial companies were especially hard hit by the escalation in trade tensions Friday. Oil prices fell nearly 5 percent this week as investors wondered if an increase in trade tensions will reduce demand for oil by slowing down the global economy. Shares of Boeing, the single largest USA exporter to China, tumbled 4.6 percent.

GDP growth to strengthen: RBI
Nevertheless, the central bank is unlikely to change its stance on rates for some time as it continues to track incoming data. In view of the global price rise in crude oil prices , the likelihood of a cut in interest rates by the MPC is quite low.

The government reported that USA employers added 103,000 jobs in March, a weaker pace than the last few months.

The S&P 500 fell 11 points, or 0.4 percent, to 2,651.

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