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Concerns regarding U.S. trade with China, and the progressing development of what this scenario looks like, is sending market futures plummeting again ahead of the opening bell. Following President Trump’s latest announcement of tariffs hitting goods coming into the U.S. from China, the Red Dragon has retaliated with tariffs being slapped on more than 100 domestic goods being shipped to China.
Currently, the Dow looks to open down 550 points, the Nasdaq -122 and the S&P 500, which hasn’t seen back-to-back gains in weeks, is -40 points. We see from this how trade with China does imply some contagion across industries — while the U.S. is targeting $50 billion in Chinese durables (think dishwashers, copiers, flat-screen TVs, etc.) with a 25% tariff and China is focused mostly on American commodities (soybeans, wheat, cotton, tobacco, etc.) — there is also the entire realm of semiconductors and other technology hardware more closely related to the Nasdaq’s domain.
For U.S. autos, this specter is even more severe: there was already a 25% Chinese tariff on autos built in the U.S. — not just American car companies like Tesla (TSLA - Free Report) either, but European plants in the U.S. South would also be affected — so this new measure would mean a full 50% tax levied on these autos being shipped to China. More than a quarter-million U.S. autos, worth nearly $10 billion, were sold in China last year. We see the results of this new measure in Tesla shares this morning, as well: TSLA is down another 5% this morning, -16.5% year over year.
ADP Private Sector Payrolls Up Big Again
All this aside, it doesn’t take much to find some very good news in today’s pre-market: 241K new private-sector jobs were created in March, according to payroll giant Automatic Data Processing (ADP - Free Report) . February revisions cranked up 11K to 246K overall. Very strong Goods-producing jobs (65K) in mostly medium-sized companies (127K) pushed these levels up toward historic highs yet again. Construction brought 31K new jobs last month, Manufacturing saw 29K with Trade/Transportation topping the list at 40K.
Predictions for Friday’s non-farm payroll totals from the U.S. Bureau of Labor Statistics (BLS) are for roughly 180K new jobs for March, although recently these estimates have been well short of the robust actuals we’ve seen; the ADP number in recent months has done a better near-term job of capturing the rapid employment growth in the U.S. The Unemployment Rate looks to stay the same at 4.1% or dip further.
Of course, none of these numbers include any sort of headwinds from a trade war with China. Then again, these tariff numbers are still all just talk, and until agreements are reached on paper between the two economic giants, this is all they will remain. But the market is clearly pricing in the risk of a nasty fight between President Trump’s people and Xi Jinping’s.
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Image: Bigstock
ADP Strength Eclipsed by China Trade Fears
Wednesday, April 4, 2018
Concerns regarding U.S. trade with China, and the progressing development of what this scenario looks like, is sending market futures plummeting again ahead of the opening bell. Following President Trump’s latest announcement of tariffs hitting goods coming into the U.S. from China, the Red Dragon has retaliated with tariffs being slapped on more than 100 domestic goods being shipped to China.
Currently, the Dow looks to open down 550 points, the Nasdaq -122 and the S&P 500, which hasn’t seen back-to-back gains in weeks, is -40 points. We see from this how trade with China does imply some contagion across industries — while the U.S. is targeting $50 billion in Chinese durables (think dishwashers, copiers, flat-screen TVs, etc.) with a 25% tariff and China is focused mostly on American commodities (soybeans, wheat, cotton, tobacco, etc.) — there is also the entire realm of semiconductors and other technology hardware more closely related to the Nasdaq’s domain.
For U.S. autos, this specter is even more severe: there was already a 25% Chinese tariff on autos built in the U.S. — not just American car companies like Tesla (TSLA - Free Report) either, but European plants in the U.S. South would also be affected — so this new measure would mean a full 50% tax levied on these autos being shipped to China. More than a quarter-million U.S. autos, worth nearly $10 billion, were sold in China last year. We see the results of this new measure in Tesla shares this morning, as well: TSLA is down another 5% this morning, -16.5% year over year.
ADP Private Sector Payrolls Up Big Again
All this aside, it doesn’t take much to find some very good news in today’s pre-market: 241K new private-sector jobs were created in March, according to payroll giant Automatic Data Processing (ADP - Free Report) . February revisions cranked up 11K to 246K overall. Very strong Goods-producing jobs (65K) in mostly medium-sized companies (127K) pushed these levels up toward historic highs yet again. Construction brought 31K new jobs last month, Manufacturing saw 29K with Trade/Transportation topping the list at 40K.
Predictions for Friday’s non-farm payroll totals from the U.S. Bureau of Labor Statistics (BLS) are for roughly 180K new jobs for March, although recently these estimates have been well short of the robust actuals we’ve seen; the ADP number in recent months has done a better near-term job of capturing the rapid employment growth in the U.S. The Unemployment Rate looks to stay the same at 4.1% or dip further.
Of course, none of these numbers include any sort of headwinds from a trade war with China. Then again, these tariff numbers are still all just talk, and until agreements are reached on paper between the two economic giants, this is all they will remain. But the market is clearly pricing in the risk of a nasty fight between President Trump’s people and Xi Jinping’s.
Mark Vickery
Senior Editor
Questions or comments about this article and/or its author? Click here>>
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Click here to see the 5 stocks >>