Why Has the Dow Jones Plunged 500 Points in One Day?

Dow Jones Industrial Average Technicals in Focus
Dow drops 500 points as Amazon tumbles, trade war fears rise
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04 April, 2018

The S&P 500 fell 58.99 points, or 2.23 per cent, to 2,581.88 and the Nasdaq Composite dropped 193.33 points, or 2.74 per cent, to 6,870.12.

In Europe, Germany's DAX fell 0.8 per cent to 11,999 while London's FTSE 100 declined 0.2 per cent to 7,037. All do big business with China.

Facebook came under heavy fire from lawmakers last month in the United States and Britain after news reports raised questions about whether it allowed third-party developers to access the data of users without their permission - a potential violation of its privacy agreement with the USA government.

Trump also threatened the North American Free Trade Agreement over the weekend, while China on Monday responded to the White House's tariffs by imposing new taxes on US imports like pork and fruits, moves that sent shockwaves through the markets.

The Chinese government said the tariffs would effectively serve as retaliation for restrictions Trump announced last month. Since then, he has exempted numerous countries, but he has not waived the impact on China. Tesla shares dropped 5.1 percent as analysts raise flags about the company's ability to meet manufacturing goals and its billions of dollars in expected shortfalls. He has accused China of trade practices that led to the closure of 60,000 factories and the loss of 6 million jobs.

U.S. stocks dropped in early trading as weakness in technology shares persisted amid renewed Presidential criticism of Amazon.com and retaliatory tariffs from China.

"The Trump administration's announcements on trade sanctions in total so far encompass a relatively small portion of overall USA trade, " according to Pride's note.

Because the major stock indexes are well below their 50-day lines, the battle now is at the 200-day. He then proceeded to exempt most major US trading partners from the levies, leaving the bulk of the measures aimed squarely at Beijing.

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Brent crude, used to price worldwide oils, rose 16 cents to $67.80 in London. "That attracts momentum sellers and they don't care what the fundamentals are".

The major reports in the USA this week include ISM Manufacturing PMI, ISM Non-Manufacturing PMI and Non-Farm Payrolls. It's a fairly small move but investors are anxious it could be step toward a trade war that harms global commerce and company profits. It is now down 1.2% for the year.

Trump's trade approach has been inconsistent, making it hard for allies and foreign leaders to know what he plans to do. But if Trump's bellicose stance on trade is a negotiating tactic, the spat could end favorably.

"This Post Office scam must stop". Meanwhile the U.S., Canada and Mexico continue to hold talks about potential changes to NAFTA.

China, though, has always been the biggest trade target for Trump.

Several Federal Open Market Committee members are also scheduled to speak.

Big-name tech companies like Amazon and Microsoft fell more than the rest of the market Monday.


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