By Caroline Valetkevitch and Trevor Hunnicutt
NEW YORK (Reuters) – U.S. stock futures fell more than 1 percent late on Thursday after U.S. President Donald Trump said he had instructed U.S. trade officials to consider $100 billion in additional tariffs on China.
S&P 500 e-mini futures
Trump, in a statement, said he proposed the additional tariffs “in light of China’s unfair retaliation” against earlier U.S. actions that included $50 billion of tariffs on Chinese goods.
“These potential trade wars are not good for the market,” said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco. “I don’t think the market will perceive them as good for the economy, so therefore they’re not good for the market. It doesn’t surprise me that as the rhetoric heats up, the market is weak.”
Hedge fund manager Doug Kass, who runs Seabreeze Partners Management Inc, said he was shorting the Standard & Poor’s 500.”The hastily crafted policy like we have seen from Trump over the last two, three days and now tonight in a world that is flat and ever-more interconnected is dangerous.”
The probabilities of a recession in the last half of 2019 and early 2020 are increasing in odds and maybe quite dramatically, Kass added, saying: “The bottom line is that our president is going to make market volatility and economic uncertainty great again.”
During the regular session, the Dow <.DJI> and the S&P 500 <.SPX> posted gains for a third day in a row, the longest streak in about a month, as investors’ worries of an escalating trade conflict between the United States and China began to ease.
On Wednesday, Trump’s top economic adviser Larry Kudlow said the administration was involved in a “negotiation” with China rather than a trade war.
Bob Smith, president and chief investment officer at Sage Advisory Services Ltd Co in Austin, Texas, said the markets were going to react adversely to Trump’s latest statement.
“Anything that’s twice as large as the last number is going to elicit a response, and I think that we’re just going to be going on this hayride for a while until they get themselves around the table and start talking turkey … at some point the market’s going to get fed up with it.”
(Reporting by Caroline Valetkevitch and Trevor Hunnicutt; Editing by Jennifer Ablan and Peter Cooney)