US benchmarks mixed at mid-session but off earlier lows; Nasdaq higher

Posted Abril 06, 2018

Stocks are getting hammered Wednesday as trade tensions between the United States and China reached a boiling point.

The Trump administration is expected sometime this week to publish a list of Chinese goods that could be subjected to new U.S. tariffs. Markets in Hong Kong were closed for a holiday.

"As a sector, technology has the most to lose from a world in which global trade is restricted and of course, some of the subjects of the tariffs, will also be hit", said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey. China's tariffs, he said during an interview with CNBC's Squawk Box, represent "about three-tenths of a percent of our G.D.P. So, it's hardly a life-threatening activity".

At 8:33 a.m. ET, Dow e-minis were up 154 points, or 0.65 percent, with 48,393 contracts changing hands. If the higher costs causes inflation to accelerate, central banks could be forced to raise interest rates more quickly, which would put another drag on economic growth.

Conatus Pharmaceuticals Inc. (CNAT) shares sank 29% on a failed drug study ( Inc (NASDAQ:AMZN) added 1.33% to US$1,410.57.

The gains came as data showed the US trade deficit widened in February for the sixth straight month, hitting a fresh nine-year record.

The biggest worry for investors is that an escalating trade war will derail a global economy that is largely growing in unison.

"If protecting US intellectual property is the ultimate goal here, I'm not sure how destroying shareholder wealth, damaging CEO confidence and making the American farmer the main sacrificial lamb here after [six] years of pain on the farm is going to get us there", Peter Boockvar, chief investment officer at Bleakley Advisory Group, wrote in a note Wednesday.

The Nikkei Stock Average, helped by a weaker yen, and New Zealand's NZX-50 were among markets eking out gains of around 0.1%, while benchmark stock indexes in Australia, South Korea, Singapore and Malaysia were down about 0.2%. Their large dividend payments make those stocks similar to bonds, and investors find the stocks more appealing when bond yields are low.

"At this point it's all theater and posturing", he said of the threatened tariffs on both sides. May-dated crude futures ended up 17 cents, or 0.3%, at $63.54 per barrel. The yield on the 10-year Treasury note rose to 2.79 percent from 2.77 percent. Heating oil lost 2 cents to $1.98 a gallon.

The S&P opened below its 200-day moving average, a key technical level, but inched above it as the session progressed, and by afternoon was in positive territory.

Smucker declined 39 cents to $123.31.

CURRENCIES: The dollar slipped to 106.49 yen from 106.62 yen in late trading Tuesday. Brent crude, used to price international oils, rose 31 cents to $68.33 per barrel in London.