Stock Market Drop Extends to Fourth Day as U.S. Prepares to Raise China Tariffs

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The resurgence of trade tensions between the United States and China, along with contradictory color commentary from President Trump, whipsawed stock markets again Thursday.

The S&P 500 notched its fourth straight daily decline, though the benchmark index pared its worst losses after President Trump suggested a trade deal could still be within reach, adding that he had received a “beautiful letter” from Chinese President Xi Jinping and may speak to Chinese leader on the phone.

The comments helped the S&P 500 regain some ground, to close down 0.3 percent Thursday, after having fallen as much as 1.5 percent earlier in the day.

The benchmark index has dropped 2.5 percent this week and is on course for its worst weekly performance of the year. This is the worst stretch for stocks since early March, when an employment report showing a sharp slowdown in hiring prompted a growth scare and sent stocks down for five consecutive days.

The week’s selling began Monday after President Trump threatened a tariff increase on imports from China even as a Chinese delegation was preparing to head to Washington for the latest round of trade talks. The higher duties, of 25 percent up from 10 percent, are set to take effect at 12:01 a.m. on Friday.

The president’s salvos against China, which have continued all week, surprised businesses and investors who in recent months thought that the world’s two largest economies were growing closer to striking a deal. On Wednesday, Mr. Trump told attendees of a rally in Florida that he was happy to punish China with more tariffs because it had reneged on agreements. Those comments helped send stocks sharply lower in early trading Thursday, before the president’s more hopeful comments lifted the mood of markets in the afternoon. But investors remain on edge.

“A lot more uncertainty got injected into the scenario,” said Kristina Hooper, chief global market strategist at money management firm Invesco. “And it looks like it’s going to go on a lot longer, just based on what we’ve seen happen this week.”

Hard hit in the United States on Thursday were shares of companies dependent on China either as a manufacturing base or major customer. They include semiconductor makers, agriculture and fertilizer companies as well as industrial equipment manufacturers.

Boeing, one of the largest American exporters, fell 1 percent Thursday. Its shares are down almost 6 percent this week.

Intel tumbled more than 5 percent, following an investor day presentation that left the market underwhelmed about the chip giant’s prospects.

Both companies receive more than 20 percent of their revenues from China, according to research from Fitch Ratings.

The tech-heavy Nasdaq composite index dropped 0.4 percent The domestically focused Russell 2000 index of small-cap stocks edged down 0.3 percent.

The losses this week are beginning to eat into Wall Street’s stellar start to the year, though the S&P 500 remains up about 14.5 percent in 2019.

The yield on the 10-year Treasury note fell, a sign that some investors were parking money in safe government bonds amid the recent market tumult. The yield on the 10-year note dropped to 2.45 percent, from 2.48 percent on Wednesday.

The gloom has also spread to markets outside the United States. Prices for key industrial commodities oil and copper, often viewed as barometer for the prospects of the global economy, fell. And Asian stock markets also closed lower on Thursday, as did major European markets.

In Japan, the Nikkei 225 closed down 0.93 percent, while the Hang Seng in Hong Kong dropped 2.39 percent. The TAIEX in Taiwan closed 1.74 percent lower, and the Kospi in Korea slid 3.04 percent.

In Britain, the FTSE 100 closed down 0.9 percent. The CAC 40 in France declined by 1.9 percent, while the Dax in Germany fell 1.7 percent.