Dow Gives Back Gains as Trade War Tensions Escalate; Binance Takes the High Road following Security Breach

The Dow and the broader U.S. stocks overcame a volatile open but still finished mostly lower on Wednesday, as investors digested dismal Chinese trade data that seemed to point to a weakening global economy.

Stocks Lose their Luster

U.S. equity markets gave back solid gains in the final moments of trading Wednesday, with the Dow Jones Industrial Average flat-lining to close at 25,967.33. The blue-chip index was up more than 150 points earlier in the day.

The broad S&P 500 Index settled down 0.2% at 2,879.42. The large-cap index was dragged down by utilities stocks, which plunged 1.4%.

The technology-focused Nasdaq Composite Index reversed course to settle down 0.3% at 7,943.32.

A measure of implied volatility known as the CBOE VIX rose just before the close, extending its winning streak to three days. The VIX, which surged more than 50% in the first two days of the week, edged up more than 3% on Wednesday. It settled just below 20.

China’s Exports Plummet

China’s trade surplus more than halved in April, as exports unexpectedly fell and imports rose.

Exports from the world’s largest economy declined 2.7% in the 12 months through April, confounding expectations of a 2.3% gain, the National Bureau of Statistics reported Wednesday. Exports rose 14.2% the prior month.

Imports rose at an annualized 4% in April compared with expectations of a 3.6% drop.

As a result, Beijing’s trade surplus plunged to $13.84 billion in April from $32.67 billion, official data showed.

The report was released mere days after President Trump threatened China with maximum tariffs on $325 billion worth of exports, a move designed to pressure Beijing into making more concessions in the ongoing trade dispute. Both countries were poised to finalize an agreement soon but China’s reneging on key policy issues has angered the Trump administration.

According to Reuters, China has backtracked on virtually all aspects of a trade deal. This was confirmed after reporters reviewed a diplomatic cable from Beijing that showed “systemic edits” to the 150-page raft trade agreement.

Crypto Markets Stabilize

Digital asset prices stabilized on Wednesday, as traders continued to evaluate the fallout from the Binance security breach that compromised 7,000 BTC earlier this week. For its part, Binance has taken the high road on the matter, admitting its infrastructure flaws and vowing to get back to normal soon. CEO Changpeng Zhao reassured traders that the exchange was well capitalized and in good standing after undergoing a few hours of unscheduled server maintenance.

Most of the top-20 cryptocurrencies traded slightly lower Wednesday afternoon, although bitcoin managed to stem the decline. The largest cryptocurrency as last valued at $5,931.80, little changed from 24 hours ago.

The overall cryptocurrency market is currently valued at $185.7 billion after having peaked near $190 billion earlier in the week.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock. Charts via Stockcharts.com and CoinMarketCap.com.

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi