The Dow Jones Industrial Average was down over 200 points in late morning trading on March 2. The index is now nearing its lowest point in 2018 since the global rout that was sparked in early February by rising bond yields and unexpectedly high wage growth. This time stocks have been rattled due to comments from U.S. Federal Reserve chairman Jerome Powell and the announcement from President Trump that his administration plans to move forward on steel and aluminium tariffs.
Goldman Sachs Group Inc. (NYSE:GS) was down 0.59% in late morning trading. The bank has inched up 0.02% in 2018 after a strong 2017. Jan Hatzius, the chief economist at Goldman Sachs, said that the steel and aluminum tariffs likely precede a U.S. exit from the North American Free Trade Agreement (NAFTA). The note pointed out that the tariffs, if implemented without any exclusions, would damage Canada which imports most of its steel and iron to the U.S.
JPMorgan Chase & Co. (NYSE:JPM) was down 0.64% in late morning trading. JPMorgan has been bullish on the economy and CEO Jamie Dimon was vocal about his support from the U.S. Tax Cuts and Jobs Act. JPMorgan chief economist Michael Feroli has predicted that consumption should pick up as we move into the year with tax cuts showing up in paychecks.
The world has responded with hostility to the announcement of forthcoming tariffs. The move could spark a trade war which could put significant downward pressure on stocks for the short to medium-term.
