| Happy Wednesday and welcome back to Overnight Finance, your stable island of sanity amid a volatile stock market. I'm Sylvan Lane, and here's your nightly guide to everything affecting your bills, bank account and bottom line. See something I missed? Let me know at slane@thehill.com or tweet me @SylvanLane. And if you like your newsletter, you can subscribe to it here: http://bit.ly/1NxxW2N. THE BIG DEAL: Fears of a growing trade war spiked again Wednesday, with dueling tariffs from the U.S. and China plunging the stock market into temporary losses. China announced Wednesday that it would impose 25 percent tariffs on imports of U.S. soybeans, airplanes and automobiles in a package affecting $50 billion of U.S. goods. The announcement came after the White House announced on Tuesday a similar $50 billion tariff package targeting Chinese electronics, shoes, furniture and other imports. The stock market--which has melted down several times this year over President Trump's trade policy and the retaliation it's inspired--didn't like that. The Dow Jones Industrial Average opened close to 500 points lower Wednesday morning, a roughly 2 percent drop. The S&P 500 index and Nasdaq each opened 1.4 percent lower, while industrial and materials sector stocks took the heaviest losses. Dow futures fell close to 500 points before Wednesday's open, implying a major loss once trading began at 9:30 a.m. S&P futures fell 1.3 percent afterhours, while Nasdaq futures dropped 1.6 percent. It was the latest market dive seemingly triggered by Trump's tariffs. Stocks also took heavy losses on Monday, when China announced tariffs on 128 U.S. goods in response to Trump's steel and aluminum tariffs. That helped send the Dow 459 points lower on Monday. But markets rebounded by Wednesday afternoon, with all three indexes posting gains at the closing bell. The Dow ended the day roughly 1 percent higher, while the Nasdaq and S&P increased 1.45 percent and 1.16 percent each. So what was behind the swing? Part of it could stem from the overall economic impact of the tariffs, assuming neither the U.S. nor China add further levies. While China's tariffs on U.S exports could take a toll on American manufacturers and farmers, they're not expected to take a leave a bit hit on the economy. Mark Zandi, Moody's chief economist, said he expects the tariffs to shave off 0.3 percent of GDP and cost 190,000 jobs. That would be a setback for the U.S. and certainly harm key industries, but it wouldn't amount to the widespread economic chaos feared by some investors. Even so, the White House did quite a bit of damage control as the market freaked. Commerce Secretary Wilbur Ross, charged with imposing and defending the tariffs, told CNBC that were "hardly a life-threatening activity. "It's relatively proportionate to the tariffs we put on based on the intellectual property," he said. And National Economic Council Director Larry Kudlow told reporters that the tariffs could be a negotiating tactic and may never be imposed, though he warned that Trump should be taken "seriously" on the issue. Reactions: - "I am nervous about getting into trade wars and I hope this doesn't go too far." -- Senate Majority Leader Mitch McConnell (R-Ky.).
- "We cannot let this continue!" -- President Trump about what he sees as unfair trade with China. He also insisted the U.S. is not in a trade war.
- "Farmers and ranchers shouldn't be expected to bear the brunt of retaliation for the entire country." -- Sen. Chuck Grassley (R-Iowa).
- "Illinois' farmers now join DACA recipients as the latest victims of President Trump's temper." -- Sen. Dick Durbin (D-Ill.).
- "Wall Street supported and cheered on the export of [middle-class] jobs. To hell with Wall Street if they don't like it." -- Steve Bannon, a former Goldman Sachs banker.
What comes next: The financial world will remain on high alert for further tariffs while U.S businesses dig in for consequences. The Hill's Niv Elis takes a look at the ways the most vulnerable sectors of the U.S. economy are preparing for the imposition of tariffs. It's an essential read on a day like today. LEADING THE DAY Jobs! U.S. businesses kept up a solid hiring pace in March, adding 241,000 jobs as the labor market continues to tighten amid an expanding economy. Private-sector companies have added at least 200,000 jobs to their payrolls each month since November, according to payroll processor ADP's latest report released on Wednesday. March's job additions were slightly slower than the 246,000 pace in February, which was higher than the 235,000 initially reported. PNC chief economist Gus Faucher said the job growth is consistent with his firm's economic outlook that found 85 percent of businesses are optimistic, with about one-third expecting to hire over the next six months and half set to increase compensation. Businesses have added 728,000 jobs in the first three months of the year, for a three-month average of more than 242,000. The Hill's Vicki Needham dives into the data for us here. Tech rivalries are spilling into Washington as the industry faces growing internal battles that have divided a once-unified front binding Silicon Valley and Seattle. Power struggles among technology companies are not new. But the size, diversity, influence and earnings of the tech sector have only grown since then, which has raised the stakes. "The funniest thing is the myth that tech has been monolithically unified and has never had differences, that tech is one big happy family and they agree on issues and they have each other's back in lobbying -- you mess with one and you mess with all," said Bruce Mehlman of Mehlman Castagnetti Rosen & Thomas. "The tech industry in Washington is as quarrelsome and divided and eager to mess with each other as they are in Silicon Valley and the marketplace." The Hill's Megan R. Wilson and Ali Breland walk us through the latest flashpoints and what they mean for the future of major tech companies--and their customers. Fitch sees peak of credit cycle in U.S. From Fitch: "A significant loosening of underwriting standards points to the U.S. leveraged debt market being in the later stages of the credit cycle, says Fitch Ratings in a special report published today. Aggressive documentation terms now prevalent could challenge recoveries in the next downturn. However, a surge in refinancing activity since 2016 should increase time between the credit cycle's bottom and peak in default rates." GOOD TO KNOW - Treasury Secretary Steven Mnuchin and White House budget director Mick Mulvaney are squabbling over whose department gets to put the finishing touches on the new tax code, according to the New York Times.
- Several major labor groups are pressing corporations over how they expect to benefit from the GOP tax law and use their savings as the unions prepare to bargain new contracts for workers.
- Facebook says up to 87 million people could be affected by the Cambridge Analytica scandal. The initial figure was roughly 50 million people.
- Comptroller of the Currency Joseph Otting lays out his plans for tackling the Bank Secrecy Act, financial technology banking charters, and more.
ODDS AND ENDS - The median sale price of a house in San Francisco soared to $1.6 million in the first quarter, an almost 24 percent jump from a year earlier, according to Bloomberg.
- A US-China trade war could threaten embattled Tesla most among automakers, reports CNBC.
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