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Trump's New Threats On Trade Hurt Stock Market


President Trump kicked the stock market back to a news-driven focus Wednesday, as new tariff threats from the White House overshadowed the start of Q2 earnings season.

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The Dow Jones industrial average carved a 0.7% loss, while the small cap Russell 2000 sliced 0.5%. The S&P 500 and the Nasdaq lost 0.6% and 0.4% respectively.

Volume rose slightly on both major exchanges.

Trump threatened to smack China with additional tariffs on $200 billion worth of imports. This would take the standoff beyond the matching level.

China has been responding to Trump’s measures with equal-sized tariffs, but China imports only $130 billion in U.S. goods. The United States imports more than $500 billion of Chinese goods, the Los Angeles Times reported.

The new tariffs would not go into effect until public hearings are completed Aug. 20-23.

Blue chips have had the most difficulties with the trade war. Wednesday was no different. Among the 30 Dow components, Caterpillar (CAT) dropped 3%; Chevron (CVX), 3%; DowDuPont (DWDP), 2.5%; and Boeing (BA), almost 2%.

In the IBD 50, a list of the best stocks in fundamentals and technicals, losers and winners were about even.

With Q2 earnings season just getting underway, only a few stocks reported quarterly results Wednesday. Two that did report were from the building products industry group.

Fastenal Soars On Earnings

Construction supply stores operator Fastenal (FAST) jumped 10% in huge volume. The company reported a 42% increase in earnings.

The Street had expected a 27% gain. Revenue rose 13%, just above views.

Fastenal announced a dividend increase. The company’s quarterly payout was raised from 37 cents a share to 40 cents a share.

The dividend will be paid Aug. 22 to shareholders of record at the July 25 close. The annualized yield is about 3%.

Maintenance supplies distributor MSC Industrial Direct (MSM) plunged 5% after reporting earnings growth in line with the consensus view of 28%. The company missed the Street’s revenue estimate for Q3.

Both Fastenal and MSC Industrial have modest foreign exposure.

(For updates on this story and other market coverage, check IBD’s stock news today.)

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