U.S. fighting back on trade, official says
NEW YORK — U.S. stocks bounced up and down and finished mostly lower Wednesday as technology companies slumped. Commerce Secretary Wilbur Ross discussed a more nationalist trade stance, with uncertain effects for the market. The dollar, already at three-year lows, got even weaker.
Stocks got off to a strong start, but technology companies took heavier losses as the day wore on, led by chipmakers after Texas Instruments gave a disappointing forecast for the current quarter. Apple also fell.
The dollar sagged against other currencies after Treasury Secretary Steven Mnuchin said the currency’s decline is good for U.S. exporters, suggesting he isn’t likely to try to stop its slide. Airlines plunged after United Continental said it plans to ramp up passenger capacity.
Mnuchin and Ross are at the World Economic Forum in Davos, Switzerland. Mnuchin’s comments sent the price of gold and silver higher, as investors often buy precious metals when they’re concerned about inflation or softness in the dollar. Weakness in the dollar usually helps companies that export a lot of goods from the U.S., but it can hurt smaller, more domestic companies by driving up the costs of imported components.
“Small caps are much more domestically focused than large caps are, but still buying from foreign companies,” said Mark Hackett, chief of investment research at Nationwide Investment Management.
Hackett said smaller U.S. companies will report faster profit growth this year than larger ones. That’s because the benefit those companies will get from the recent corporate tax cut will outweigh the pain from the weaker dollar.
Investors have focused on global trade issues the last few days. On Tuesday, the administration placed tariffs on imported solar power components and washing machines.
On Wednesday, Ross said the U.S. is fighting back against countries that have taken advantage of trade deals in the past.
“Trade wars are fought every single day,” Ross said. “Unfortunately, every single day there are various parties trying to violate the rules, and trying to take unfair advantage of things . ... The difference is that U.S. troops are now coming to the ramparts.”