Dow Frantically Searches for Silver Lining After China Shocks White House

By CCN: The Dow and broader U.S. stock market frantically searched for a silver lining Thursday after China threatened harsh retaliation in response to a sizable tariff increase by the White House that could be implemented in the next 24 hours.

Dow, S&P 500 Extend Brutal Slide

All of Wall Street’s major indexes declined sharply through the morning session, reflecting a brutal pre-market for Dow futures. The Dow Jones Industrial Average fell by as much as 450 points before paring losses. It was last down 105.8 points, or 0.41%, at 25,861.53.

Dow Jones

Dow Jones Industrial Average stems losses after a brutal morning session. | Chart via Yahoo Finance.

The broad S&P 500 Index of large-cap stocks declined 0.22% to 2,873.19. Most major sectors reported declines, with information technology companies shouldering the heaviest losses.

Meanwhile, the technology-focused Nasdaq Composite Index declined 0.35% to 7,915.41.

The CBOE Volatility Index, commonly known as the VIX, flashed a dire warning sign on the bull market Thursday. The so-called “fear index” surged more than 20% and peaked at 23.38, its highest since early January. It has since given back most of its gains and is trading in the low-19 region.

A VIX reading in the 20-25 range is consistent with the historical average. Anything above that paints an overwhelmingly bearish picture for stocks.

China Retaliates Against Trump Tariff Threat

xi jinping, china, dow jones

U.S.-China trade negotiations sour at the worst possible time, placing intense pressure on the Dow. | Source: AP Photo / Andy Wong

China has taken a hard line in its ongoing trade negotiations with the United States after President Trump threatened to impose higher import duties on Chinese goods.

According to The Wall Street Journal, China’s hardened stance surprised White House officials at a critical juncture in negotiations.

Trump’s Sunday Twitter tirade, where he threatened to impose import duties of 25% on Chinese goods, came after one of his top trade advisers complained that Beijing had reneged on a trade deal. China says its tone changed because the U.S. appeared ready to make important concessions.

On Thursday, a Chinese Commerce Ministry spokesperson issued the following statement, which was conveyed via the official Xinhua News Agency:

“The escalation of trade friction is not in the interest of the people of the two countries and the people of the world … The Chinese side deeply regrets the action. If the U.S. tariff measures are implemented, China will have to take necessary countermeasures.”

Click here for a real-time Dow Jones Industrial Average chart.

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