A wild week ends on a down note

Stocks stumbled Friday as worries flared yet again that President Trump’s trade war with China may be worsening. It was a fitting end to a wild week where markets zoomed down, up and down again as investors recalibrated by the minute how much the tensions will hurt the global economy.

The S&P 500 dropped as much as 1.3% Friday after Trump said that it would be “fine” if a meeting on trade with China next month doesn’t happen, before nearly eliminating the loss. It dropped again in the final minutes of trading and ended the day at 2,918.65, down 19.44 points, or 0.7%.

The Dow Jones Industrial Average fell 90.75, or 0.3%, to 26,287.44, and the Nasdaq lost 80.02, or 1%, to 7,959.14.

To anyone not paying attention, the numbers could paint the last week as a hohum one for markets: The S&P 500 was down just 0.5%. But that stretch included the worst plunge of the year for the S&P 500, as well as its best day in months.

Through the week, the collective mood of investors pinballed from fear that China was raising the stakes in the trade war by weakening its currency to relief that the yuan’s drop wasn’t sharper and back to concern that the U.S. and China may not even meet next month to talk about their problems. All of that was follow-up to Trump’s threat last week to impose more tariffs on Chinese goods.

Underscoring the uncertainty, investors said they had no good explanations for some of the sharp swings that stocks had over the last week.

The S&P 500 is only 2.1% below its record, which was set at the end of July. It’s also up 9% since Trump said in March 2018 that “trade wars are good, and easy to win.”

The economy is still growing, and the unemployment rate remains near its lowest level in half a century. The fear is that all the uncertainty that has caused stock prices to swing sharply could also make businesses and shoppers more cautious. If they pull back on their spending, it could lead to weaker profits for companies, which could cause businesses to cut back on hiring, which could do real damage to the economy.

Such fear has been most pronounced in the bond market, where yields have tumbled as investors scrambled for protection. When bond prices rise, their yields fall, and the yield on the 10year Treasury sat at 1.73% Friday, down from 1.85% a week ago. It rose from 1.71% late Thursday and had been below 1.60% during the week.

Other areas of the world are facing even weaker economic growth, and the British government reported that its economy shrank in the second quarter for the first time since 2012.

In the commodities markets, benchmark U.S. crude jumped $1.96 to settle at $54.50 a barrel. It had dropped as low as $50.52 earlier in the week amid worries that a weaker global economy would dent demand for energy. Brent crude, the international standard, rose $1.15 to $58.53 per barrel.