Stocks slammed on Friday as President Donald Trump’s proclaimed threat to impose tariffs on all imports from Mexico. Together with the worries about the aggravating trade war with China, investors fear this action could imperil the U.S. economy, sending it into another recession.
Going to its sixth weekly straight loss, the Dow Jones Industrial Average sank almost 355 points or 1.41% at 24,815.04. Meanwhile, S&P 500 plunged 1.3% to 2,752.06. Also, slipping down is the Nasdaq Composite, which dropped 1.5% to 7,453.15. The failed trade talks with China and the worsening rhetoric between the two countries caused volatility to spike – forcing S&P 500 finish the month low at 6.6%.
Evercore ISI’s head of global policy and central bank strategy Krishna Guha stated in a note that President Trump’s recent shocker on Mexico might turn to be only a short-term threat that was swiftly brought by border security pressure, but at any state can still cause damage at different levels.
Guha further stressed that at a more significant standpoint, it implies that Trump’s trade policy may well entail a constant state of instability and uncertainty with the worldwide trading system and not merely a pragmatic successive reset of previous arrangements that began with Mexico and directs to China, Europe, and Japan.
Friday’s slip counted up to stock’s horrible week and month. This week, the Dow dropped 3% which is its sixth consecutive weekly loss. Records show that it is the longest successive Dow losing streak since 2011. The Nasdaq and S&P 500 also notched their fourth succeeding weekly loss while the major indexes tallied their four-month winning streak.
Union Pacific and Kansas City Southern railroad shares also dropped by 2% and 4.5% respectively. Constellation Brands fell 5.9%. Fiat Chrysler went down 5.8%.
Automaker General Motors plunged 4.25% last Friday. Meanwhile, Ford went down 2.3%. Both firms have notable production in Mexico that could be imposed with tariffs.
Emmanuel Rosner, a research analyst from Deutsche Bank, stated in a research note that automakers might face tremendous financial whack and precariousness from the tariffs. He stressed that all large original equipment manufacturers get a substantial number of their vehicles from Mexico and also utilizes a large portion of imported materials from Mexico in the automobiles they make in the U.S.
Lastly, Rosner stressed that the tariffs could undoubtedly be transferred to the consumers that could elevate the price of vehicles being sold in the U.S. to an average of around $1,300.