Dow sinks 500 points upon open as US, China issue new tariffs

Investors are having to weigh the growing protectionist rhetoric between the US and China against the chances of measures having a meaningful effect on the still-upbeat global growth picture.

"The market does not like uncertainty and right now we have a lot of it".

The S&P 500 fell 27 points, or 1 percent, to 2,635.

The declines were broad based.

Stocks in the USA are rising Thursday and major indexes in Europe are surging as global markets continue a rally that began late the previous day.

"It's tit-for-tat as China retaliates, sending the markets in a tailspin".

The stock futures implied the S&P 500 would not only open below its 200-day moving average, a key support level watched by technical analysts, but also challenge its 2018 low from February 9.

Industrial companies might face the worst pain from tariffs, as they could find themselves dealing with higher costs for components imported into the USA while the duties on their goods in China harm their sales. But unlike Washington's list that covers many obscure industrial items, Beijing's covers 106 key USA imports including soybeans, planes, cars, and chemicals.

Industrial companies were especially hard hit by the escalation in trade tensions Friday.

Boeing rose 1.9% and Caterpillar gained 1.5%.

Advanced Micro Devices (AMD.O) jumped 3.2 percent after Stifel upgraded to "buy", while Micron Technology (MU.O) fell 5.3 percent after UBS started with a "sell" rating. But stocks turned higher and the Dow finished with a gain of 230 points as officials in both countries reassured investors that they are willing to talk and aren't rushing into a trade war that could hurt global economic growth and company profits.

With the Dow Jones Industrial Average now frequently dipping into correction territory, the minds of many traders and investors are turning to the question of how long before this bull run - the longest in Dow history post-World War II - becomes a full-on bear market. All components of the Philadelphia chipmakers index trading premarket were lower, led by AMD's 4 percent drop. The company admitted it made a "huge mistake" in not focusing more on potential abuse of users' personal information.

Investors headed for safer bets. Johnson & Johnson sank $2.99, or 2.3 percent, to $127.72 and health insurer UnitedHealth dropped $59, or 2.6 percent, to $223.18.