Dow Jones Futures: Stock Market Awaits Trump Tariff Hike, Escalating China Trade War - Investor's Business Daily

Dow Jones futures fell early Friday, along with S&P 500 futures and Nasdaq futures. President Donald Trump hiked China tariffs just after midnight, a big decision for the current stock market rally. China says it will retaliate, though China trade talks will continue Friday after halting Thursday night. The stock market indexes fell again Thursday amid various Trump comments on China trade. Apple stock briefly undercut a buy point Thursday while Alibaba (BABA) invalidated a recent entry point. Boeing (BA) continued to cut lower. AMD (AMD) rebounded from key support even as Intel stock sold off again.

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China trade talks resumed late Thursday with Vice Premier Liu He meeting with U.S. Trade Representative Robert Lighthizer and other top officials. President Trump, Lighthizer and other U.S. officials have said China is backing off prior trade deal commitments. Trump said Wednesday night that Beijing "broke the deal."

Liu's working dinner with Lighthizer and Treasury Secretary Steven Mnuchin ended, with talks resuming Friday morning, the White House said.

Trump went ahead and raised tariffs on $200 billion worth of Chinese goods to 25% from 10%. He's also signaled recently that he's mulling 25% tariffs on the remaining $325 billion worth of Chinese goods. China said it "deeply regrets" the tariff hike and said it "take necessary countermeasures," but didn't specify how it will retaliate.

Dow Jones Futures Today

Dow Jones futures fell 0.3% vs. fair value after previously rising and falling. Apple (AAPL), Intel (INTC) and Boeing stock are all Dow Jones components. S&P 500 futures sank 0.35% and Nasdaq 100 futures 0.35%.

Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.

Current Stock Market Rally

The current stock market rally suffered another volatile session. The Dow Jones and other major averages fell sharply in the morning after Trump said China "broke the deal." The S&P 500 index and Nasdaq undercut their 50-day lines while the Dow neared its 200-day.

Apple stock fell as low as 196.66, undercutting its 197.79 buy point. Boeing stock skidded as much as 3.4% after falling below its 200-day line Wednesday. Chinese e-commerce giant Alibaba stock skidded 3.7%, making a prior buy point invalid. AMD stock fell to its 50-day line. All are exposed to the China trade war in various ways.

But the stock market pared losses after Trump said Chinese President Xi Jinping wrote him a "beautiful letter." Closing near session highs, the Dow Jones fell 0.5%, the S&P 500 lost 0.3% and the Nasdaq composite shed 0.4%. AMD stock actually closed up 0.4%.

Still, the current stock market rally continues to lose ground, racking up yet another distribution day. The stock market rally is under pressure. While Apple closed in buy range at 200.72, it's down 5.2% so far this week. Boeing stock, the biggest weight in the Dow Jones, is off 5.9%. Alibaba stock closed down just 0.3%, but the Chinese e-commerce giant has lost 8.3% this week.

Growth Stocks Hold Up Well

Growth stocks, especially in software, fared relatively well Thursday.

Among the best ETFs, Innovator IBD 50 (FFTY) dipped 0.1%, with some big IBD 50 software winners. The iShares Expanded Tech-Software Sector ETF (IGV) edged down 0.1%.

The VanEck Vectors Semiconductor ETF (SMH) fell 1.4%. But a lot of that is due to Intel (INTC), which plunged 5.3%. That's after Intel stock skidded 2.45% Wednesday, with the industry giant predicting sluggish growth over the next three years.

What You Should Do Now

With the current stock market rally under growing pressure, investors should have been pulling back, taking some profits and being quick to cut losses. The Trump tariff threat is akin to an earnings report for the entire stock market. Depending on tonight's outcome, the broader indexes could jump or tumble right at the open — but not necessarily finish that way.

If the stock market moves higher, quality stocks will soon offer new buying opportunities. If the pullback turns into a market correction, most stocks will lose ground.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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2019-05-10 02:56:01Z
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