Stocks traded lower on Friday amid renewed trade war fears as Wall Street concluded a wild week.
The Dow Jones Industrial Average traded 259 points lower, or 1%. The S&P 500 fell 1.2% while the Nasdaq Composite shed 1.5%.
Overnight, Bloomberg reported that the U.S. is holding off on giving permission to U.S. companies to use Huawei products, citing people familiar with the matter. Chip stocks fell on the news. Micron Technology and Skyworks Solutions both traded more than 3% lower while Advanced Micro Devices slipped 1.2%.
President Donald Trump told reporters on Friday the U.S. will not do business with Huawei. He also said the U.S. is not ready to strike a trade deal with China.
“China wants to do something, but I’m not doing anything yet,” Trump said. “Twenty-five years of abuse. I’m not ready so fast.”
This comes after China decided to stop buying American crops and after the U.S. officially declared China a currency manipulator earlier this week. The U.S. designation came after China let its currency, the yuan, fall to its lowest level in a decade relative to the dollar, sparking the biggest sell-off of 2019 for stocks.
“If there was any doubt, President Trump has clearly moved from trade wars to currency wars,” said Harvinder Kalirai, chief fixed income and FX strategist at Alpine Macro, in a note. He said the Federal Reserve will be pushed towards aggressive easing measures if President Donald Trump keeps pressuring China. “Investors should incorporate intrinsic hedges to ride out market volatility and protect themselves from policy errors.”
Trump said on Friday he was not ready to make a deal with China just yet on the trade front, adding the U.S. has “all the cards” in the negotiations.
Stocks have had a volatile week, with the major indexes recording their biggest one-day sell-off of the year on Monday. The indexes recovered some of those losses on Tuesday.
On Wednesday, stocks resumed their sell-off as investors loaded up on traditionally safer government bonds and gold before staging a sharp comeback. By Thursday’s close, the indexes had recovered most of their losses from Monday’s drop. But the major indexes Friday decline brought them squarely into negative territory for the week.
The S&P 500 and Nasdaq both down 1% for the week through late-morning Friday. The Dow was down 1.4%.
Traders are also keeping a close eye on the bond market, where the recent appetite for U.S. debt has pushed a bond market recession indicator close to a warning zone. If investors trigger a recession warning in the bond market that tends to be negative for stocks.
In Europe, bank stocks led markets lower Friday as Italian lenders tumbled on political uncertainty in the country. Italy’s coalition government imploded on Thursday evening, as deputy prime minister and leader of Italy’s ruling Lega party, Matteo Salvini, declared the arrangement unworkable and called for fresh general elections.
—CNBC’s Silvia Amaro contributed to this report.