Stocks whipsaw as conflicting trade-war signals confuse traders

  • Major US indexes endured a volatile day of trading on Thursday as investors grappled with conflicting signals around the US-China trade war.
  • China said the US had “seriously violated” the recent ceasefire between the two countries when it announced new tariffs would take effect in September.
  • A representative from China’s foreign ministry also told reporters on Thursday that the two sides are still maintaining high-level communication, which allayed some fears of another standstill in negotiations.
  • The uncertainty sent investors piling into long-term government bonds as the yield on the 30-year Treasury slid below 2% for the first time.
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Stocks whipsawed on Thursday as investors wrestled with conflicting signals on the state of the trade war between the US and China.

China said in an official statement on Thursday that it planned to retaliate against the US for threatening to impose additional tariffs in September and that the Trump administration “seriously violated” an agreed-upon ceasefire between the two countries.

The statement sent stocks falling in the morning as it brought into question the success of future trade negotiations. Some of the market’s losses were recovered after Hua Chunying, a representative for China’s foreign ministry, told reporters later on Thursday that the two countries continued high-level communications through meetings, letters, and phone calls.

Bond buying increased again as investors sought safer assets amid the varying statements. The yield on the 30-year Treasury fell below 2% for the first time, while the 10-year Treasury yield slipped below 1.5%.

Stocks leveled out in the afternoon partially due to upbeat economic data from the US Commerce Deparment. The agency reported retail sales picked up 0.7% in July from the same month last year. The data is a positive sign amid a flurry of recession signals that have sprouted up over the last week.

Here’s a look at the major indexes as of the 4:00 p.m. close on Thursday:

General Electric’s stock tanked as much as 14% after a whistleblower in the Madoff Ponzi scheme case released a report on Thursday alleging that GE is committing fraud “bigger than Enron and WorldCom combined.” Harry Markopolos, an accounting expert, said his team analyzed GE’s accounting and found $38 billion worth of fraud, calling it “merely the tip of the iceberg.”

Shares of Walmart surged 6.1% after the retailer reported second-quarter earnings results that beat expectations for revenue and profit. The company grew its e-commerce sales by 37% during the period, largely driven by a improvements in online grocery delivery.

Within the S&P 500, these were the largest gainers:

And the largest decliners:

Real estate posted the largest gains in the S&P 500. Consumer staples gained as well, while utilities climbed. Energy stocks fell more than any other sector.