Trump's trade war antics just spoiled a perfectly good jobs report

Donald Trump and Xi Jinping

Carlos Barria/Reuters

Donald Trump and Xi Jinping.

  • The March jobs report fell into an investor sweet spot that should've sent stocks soaring.
  • Instead, major US indexes remained negative as investors instead focused on President Donald Trump's overnight escalation of a trade war with China.

Under normal circumstances, the March jobs report released Friday would've sent stocks surging.

That's because it was, in many ways, the perfect set of results for the market. It met multiple key attributes of a so-called "Goldilocks" environment - defined as steady growth without inflation - as the number of jobs added grew quarter-over-quarter, while average hourly earnings fell in line with expectations.Advertisement

But these are not normal circumstances.

Instead of surging on the report, futures on the benchmark S&P 500 remained locked in negative territory, down more than 0.7%. The index remained roughly 0.4% lower in early regular-hours trading, while the Dow Jones industrial average lost 0.4%, and the more tech-heavy Nasdaq 100 slid 0.3%.

And the market has President Donald Trump to thank for its futility.

On Thursday night, hours after the market closed, the White House said in a statement that Trump was considering new tariffs on $100 billion worth of annual imports from China. The announcement immediately sent S&P 500 futures plummeting as much as 1.5%. And while losses pared slightly in the ensuing hours, futures stayed firmly lower overnight ahead of the jobs report.

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As the last couple weeks have shown, China isn't going to take tariffs lying down, and it made that abundantly clear on Thursday night. Around the same time as Trump's new remarks, a senior Chinese government official in Beijing reiterated that his country would "retaliate immediately, intensively, without any hesitation," according to a Bloomberg report.Advertisement

This is just the latest episode in the trade war brewing between the US and China, which has put considerable pressure on equities in recent weeks. This past Monday, US tech stocks saw their 2018 year-to-date gain erased amid rising trade tensions.

Despite his persistence on the trade front, recent turbulence has surely rankled Trump, who for months after his election victory prided himself on the record-setting stock market.

And while the S&P 500 still has a ways to go to erase the so-called "Trump bump," it's undeniable that the president's combative trade stance is among the market's biggest headwinds.Advertisement

"We're seeing the first real potential trade war in most of our lifetimes, which can shake confidence," Brad McMillan, the chief investment officer of $150 billion Commonwealth Financial Network, told Business Insider in a recent interview. "It marks a departure from what we've seen for the last 30 years. It's the unpredictability and uncertainty that has people so worried."