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10-May2019

US markets lower after US President claims China broke the deal

The US markets ended lower on Thursday as trade tensions ramped up after US President Donald Trump threatened tariff retaliation on China, which he claims broke the deal. Anxiety over the prospect of a deepening trade dispute between the US and China has weighed on stock markets all week. Those fears were compounded Wednesday when the president accused the Chinese of negotiating in bad faith and reneging on commitments made in previous rounds of negotiation. The White House has threatened to raise tariffs on $200 billion in annual Chinese exports to the US to 25% from the current 10% on Friday. However, downside remained capped after Trump said a trade deal with China is still possible. Trump indicated he has set a midnight deadline to reach a trade agreement, calling raising tariffs an excellent alternative.

On the economic front, the Commerce Department released a report showing the US trade deficit widened in the month of March. The report said the trade deficit widened to $50.0 billion in March from a revised $49.3 billion in February. Street had expected the deficit to widen to $50.2 billion. The wider trade deficit came as the value of imports surged up by 1.1 percent to $262.0 billion compared to a 1.0 percent jump in the value of exports to $212.0 billion. The Labor Department also released a report showing producer prices increased in line with Street estimates in the month of April. The report said producer price index for final demand rose by 0.2 percent in April after climbing by 0.6 percent in March. The uptick in prices matched expectations. Besides, a separate Labor Department report showed first-time claims for US unemployment benefits pulled back by less than expected in the week ended May 4th. The Labor Department said initial jobless claims dipped to 228,000, a decrease of 2,000 from the previous week's unrevised level of 230,000. Street had expected jobless claims to drop to 220,000.

Dow Jones Industrial Average dropped 138.97 points or 0.54 percent to 25828.36, Nasdaq declined 32.73 points or 0.41 percent to 7910.59 and S&P 500 was down by 8.70 points or 0.30 percent to 2870.72.


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