U.S. stocks drop, treasuries rise on trade gloom
New York (Online): U.S. stocks fell, while Treasuries rose as President Donald Trump’s plans to punish imports appeared to gather force. The dollar weakened against the Japanese yen and euro.
The S&P 500 Index headed for the first decline in four days after the resignation of Trump economic adviser Gary Cohn removed a free-trade proponent from the White House and news that the president is considering clamping down on China. European shares erased declines as investors awaited key central bank decisions and U.S. labor data later this week.
Elsewhere, Treasury yields fell for the first time in four sessions, leading most bond yields lower across Europe. The yen rose to its strongest level in almost 16 months. Oil fell on rising U.S. stockpiles and as trade-war fears sapped most commodities. Gold slipped.
“Mr. Cohn’s departure moves the bar significantly for the expectations of how far down the road this administration will go towards a trade war,” Matt Maley, a Miller Tabak equity strategist, wrote in an email. “No, it does not guarantee the ‘worst case scenario’ will be the result, but the ‘likely scenario’ just moved a lot closer to a more negative outcome.”
The European Union mounted a last-ditch push to stop Trump from triggering tariffs on foreign steel and aluminum, vowing a “firm” response and warning of widespread damage from a trans-Atlantic trade war. Chinese officials — who have been studying curbs on U.S. products such as soybeans according to past reports — appeared to remain mostly quiet on the tariff question Wednesday.