Market Update: Trade War Roils Equity Markets as Dow Drops 251 Points

U.S. stocks were back on the defensive Thursday, as the prospect of trade war triggered an exodus from riskier assets.

Stocks Decline

All of Wall Street’s major indexes headed for losses Thursday, with the Dow falling more than 300 points in intraday trade. The blue-chip index settled down 251.94 points, or 1%, at 24,415.84.

The broader S&P 500 Index declined 0.7% to 2,705.27, with ten of 11 primary sectors finishing lower. Consumer staples and industrials each fell more than 1.5%.

Meanwhile, the Nasdaq finished with a loss of 0.3% as technology shares broke even. The tech-driven index closed at 7,442.12.

Across the Atlantic, European stocks fell even harder as trade tensions added to an increasingly volatile outlook. The Euro Stoxx 50 Pr declined 1% to close at 3,406.55. All major bourses finished lower, with Germany’s DAX and the IBEX 35 in Spain shedding at least 1.1%.

The CBOE VIX, a measure of implied volatility in U.S. equities, rose again Thursday as risk sentiment wavered. Wall Street’s fear index climbed more than 3% to 15.43.

Trump Administration Imposes Tariffs

The threat of trade war loomed large on Thursday after the Trump administration announced it would impose steel and aluminum tariffs on the European Union (EU), Canada and Mexico. The three jurisdictions account for roughly 40% of U.S. steel imports.

In response, the EU announced it would implement retaliatory tariffs effective immediately. Canada announced tariffs on as much as $12.8 billion worth of U.S. commodities beginning July 1.

“This is a bad day for world trade,” European Commission President Jean-Claude Juncker said in Brussels following the announcement. “It’s totally unacceptable that a country is imposing unilateral measures when it comes to world trade.”

Cryptocurrencies Gaining Momentum

Crypto assets have gained nearly $15 billion in value over the past 24 hours, a sign that momentum was slowly returning to the market.

The combined value of all cryptocurrencies peaked near $336 billion on Thursday, according to CoinMarketCap. At the time of writing, all but one of the top-ten coins had reported gains.

Bitcoin peaked near $7,600, and in doing so, erased its five-day decline.

Ethereum rallied to a high near $586; it would later consolidate at $578 for a gain of nearly 5%.

Cardano surged more than 10% following the launch of its smart contract testnet. ADA coin was trading at $0.227.

IOTA’s MIOTA coin was the top performer among major assets, gaining 14.6% to $1.77. Stellar XLM was also among the biggest gainers, rising 9% to $0.298.

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.

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