US Stocks Tripped on Trade War Fears
In yet another volatile week, stock markets ended the week on a subdued note. Investors were concerned about the beginning of a trade war after President Trump imposes 25% tariffs on the import of steel and 10% on aluminum. In our recent series Bracing for Higher Volatility in 2018, we discussed how rising trade protectionism could lead to sharp volatility in the markets.
The Dow Jones Industrial Average (DJI-INDEX) (DIA) dropped 772 points, or 3%, to finish the week at 24,538. The S&P 500 Index (SPX-INDEX) (SPY) dropped 2% to 2,691.25, while the Nasdaq Composite (COMP-INDEX) (QQQ) tripped 1.1% to 7,257.87.
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Bank and insurance stocks came under pressure
With the decline in broader benchmarks, financials and insurance stocks also came under pressure. The S&P 500 Financial Index contracted 2.3% to close the week at $471.44, while the S&P Insurance Select Industry Index plunged 2.5%.
Citigroup (C), which has to refund $335 million to credit card customers, dropped the most by 4.4%. Other major losers included US Bancorp (USB), J.P. Morgan (JPM), and Goldman Sachs (GS) with falls of 3.7%, 3.4%, and 3.2%, respectively. The Financial Select Sector SPDR ETF (XLF) and the Vanguard Financials ETF (VFH) also dropped more than 2% each. In the insurance sector, American International Group (AIG), which posted a huge loss in 4Q17, dipped 5.9%.