NEW YORK (AP) — Stocks flopped on Friday, and investors herded into the safety of bonds after the market's reading of the U.S.-China trade war flipped back to worry.
U.S. stock indexes fell as soon as trading opened, following European and Asian markets lower. Industrial companies had the sharpest losses after equipment maker Deere cut its profit forecast for the year, citing slower sales from farmers worried about exports, among other factors. More than 80% of the stocks in the S&P 500 fell.
It's the latest swing for a market that has pivoted for two weeks on each turn in the U.S. trade dispute with China. President Donald Trump made good on a threat to raise tariffs on Chinese-made products and China retaliated with tariffs of its own. The threats were interspersed with some signs of reconciliation. Over the last week, the S&P 500 followed up its second worst day of the year with three straight gains before falling again on Friday.
The escalating tensions between the world's largest economies have upended the calm that dominated markets for the early part of this year, when expectations rose that a trade agreement was in the works. The S&P 500 has twice dropped by at least 1.5% in the last two weeks, the same number it had in the first four months of the year.
With Friday's loss, the S&P 500 is on track to close out its second straight down week. If it does, it would be the first time that's happened this year where the index is up more than 14%.
KEEPING SCORE: The S&P 500 was down 0.6%, as of 9:50 a.m. Eastern time. It remains just 3% below its record, set last month.
The Dow Jones Industrial Average dropped 130 points, or 0.5%, to 25,732, and the Nasdaq composite fell 0.7%.
WORLDWIDE PRESSURE: In China, Shanghai's stock index fell 2.5%, its worst drop since a 5.6% plunge last week. The Hang Seng in Hong Kong lost 1.2%, and South Korea's Kospi fell 0.6%. Japan's Nikkei 225 was an outlier, up 0.9%.
In Europe, Germany's Dax dropped 1.1%, the French CAC 40 lost 0.7% and the FTSE 100 in London fell 0.5%.
SEEKING SAFETY: When investors are nervous, they often turn to the safety of U.S. government bonds. When bond prices rise, their yields drop, and the yield on the 10-year Treasury fell to 2.37% from 2.40% late Thursday. The 10 year yield has been dropping since November, when it was above 3.20%.
TRADE FRONTS: The Trump administration has issued an executive order aimed at banning Huawei equipment from U.S. networks. Another sanction that subjects the Chinese telecommunications giant to strict export controls took effect on Thursday. China has threatened to retaliate. It remains to be seen how the move will affect trade negotiations, which are expected to continue.
"The trade issue could still get worse before it gets better, but our view remains that a deal will ultimately be reached to resolve the issue given the economic (and in Trump's case political) damage that would be caused if a deal is not reached," Shane Oliver of AMP Capital said in a commentary.
Besides China, investors are also watching how the U.S. deals with closer rivals on trade. President Trump on Friday delayed any decision to impose tariffs on car and auto part imports as negotiations continue with Europe and Japan.
OH DEERE: Agricultural equipment maker Deere had the biggest drop in the S&P 500 after it reported weaker earnings for the latest quarter than analysts expected and cut its forecast for sales and income this fiscal year.
The company may be feeling the effects of the U.S.-China trade war. CEO Samuel Allen said that farmers are becoming more cautious about making big purchases, citing "ongoing concerns about export-market access."
Deere dropped 4.4%.
AP Writer Annabelle Liang contributed from Singapore.