By Anora M. Gaudiano and Barbara Kollmeyer, MarketWatch

China fires retaliatory salvo against U.S. tariffs

U.S. stock-market indexes traded between small gains and losses on Friday, a day after equities plunged on the prospect of a global trade war as China fired its first retaliatory salvo against tariffs on at least $50 billion of Chinese goods announced by the Trump administration.

Investors sought shelter in gold and the Japanese yen, which was trading at its highest levels since the U.S. presidential election in 2016, after one of the worst days for Wall Street in weeks.

What are the main benchmarks doing?

The S&P 500 was up by 10 points, or 0.4%, to 2,653, with nearly all the 11 main sectors trading higher, led by a 1.4% gain in the energy sector.

The Dow Jones Industrial Average was up 120 points, or 0.5% to 24,067.

Meanwhile the Nasdaq Composite Index advanced 8 points, or 0.1%, to 7,174.

With one session left to go in this week, the main benchmarks are each down nearly 4% for the week. That would mark the worst week for those indexes since the week ending Feb. 9, when markets were routed amid concerns over rising inflation and bond yields (http://www.marketwatch.com/story/dow-poised-to-edge-up-as-traders-lick-their-wounds-after-a-punishing-stretch-2018-02-08).

The Cboe Volatility Index retreated slightly, but at about 22, above its long-term average of 20 on Thursday (http://www.marketwatch.com/story/wall-streets-fear-index-jumps-20-amid-stock-selloff-2018-03-22).

What's driving markets?

China reacted to Trump administration's plans to impose tariffs (http://www.marketwatch.com/story/trumps-china-tariffs-a-fight-for-control-over-robots-wireless-other-future-technologies-2018-03-22), as Beijing's commerce ministry fired back with tariffs against $3 billion in U.S. goods (http://www.marketwatch.com/story/china-plans-3-billion-in-retaliatory-tariffs-against-us-goods-2018-03-22).

China stopped short of penalties on the biggest salvos in a potential trade war, leaving off soybeans, sorghum and Boeing (BA) aircraft, indicating Beijing may be looking for leverage in any negotiations with the U.S.

In one bright spot, the White House late Thursday formally approved tariff reprieves for the European Union (http://www.marketwatch.com/story/eu-plus-six-other-nations-get-temporary-us-tariff-reprieve-2018-03-23) plus six other nations, including Canada and Mexico.

Read:Here's why the stock market took the China tariffs so hard (http://www.marketwatch.com/story/heres-why-the-stock-market-took-the-china-tariffs-so-hard-2018-03-22)

Read:Trump, Xi enter rockier phase as U.S.-China trade fight heats up (http://www.marketwatch.com/story/trump-xi-set-to-undergo-rockier-phase-as-trade-fight-heats-up-2018-03-22)

(http://www.marketwatch.com/story/trump-xi-set-to-undergo-rockier-phase-as-trade-fight-heats-up-2018-03-22)Elsewhere, President Donald Trump said on Friday that he might veto the $1.3 spending bill (http://www.marketwatch.com/story/congress-rushes-to-approve-13-trillion-spending-bill-and-avoid-shutdown-2018-03-23)approved by the Senate, because it didn't fully fund his proposed border wall.

What are the data?

Durable-goods orders (http://www.marketwatch.com/story/durable-goods-orders-snap-back-with-31-gain-as-business-investment-surges-2018-03-23)jumped 3.1% in February, largely reversing a big drop at the start of the year and posting the largest gain since last summer.

New-home sales were at a 618,000 (http://www.marketwatch.com/story/new-home-sales-chug-higher-in-february-2018-03-23)seasonally adjusted annual rate in February, only slightly below the MarketWatch consensus of a 630,000 pace.

Meanwhile, Atlanta Fed President Raphael Bostic said he is likely to support more interest-rate hikes this year (http://www.marketwatch.com/story/bostic-says-he-is-likely-to-support-more-rate-hikes-this-year-2018-03-23), saying there are upside risks to both GDP and employment and building if modest inflation pressures

What are strategists saying?

"After a selloff on Thursday, markets are consolidating, perhaps investors assessing just how bad the escalation by China will be. China stood up to the U.S. in a measured way, but I doubt they would want to invite a second round of tariffs," said Wouter Sturkenboom, senior investment strategist at Russell Investments.

"In the short term, China has more to lose due to tariffs, but in the long term, everybody loses, with consumers picking up the tab," Sturkenboom said.

"The selloff has created some buying opportunities, though overall we are still concerned about valuations of U.S. equity markets," he added.

Read:'I don't think this is a trade war,' says veteran Wall Street strategist (http://www.marketwatch.com/story/i-dont-think-this-is-a-trade-war-says-veteran-wall-street-strategist-2018-03-23)

What stocks are in focus?

Micron Technology Inc.(MU) shares fell after the company posted an earnings beat late Thursday, but also announced plans to spend money building out its fabrication sites.

Read:Micron bets that memory demand is here to stay (http://www.marketwatch.com/story/micron-bets-that-memory-demand-is-here-to-stay-2018-03-22)

Dropbox Inc. is scheduled to debut on Friday. The company priced its initial public offering at $21 a share late Thursday, above its expected range, according to The Wall Street Journal.

Nike Inc.(NKE) shares surged after swinging to a fiscal third-quarter loss, but posting a beat on sales (http://www.marketwatch.com/story/nike-swings-to-loss-but-sales-beat-expectations-shares-rise-2018-03-22).

Read:Nike CEO says company has 'deep leadership bench' after reshuffle (http://www.marketwatch.com/story/nike-has-deep-leadership-bench-says-ceo-2018-03-23)

Shares of Kroger Co.(KR) and Target Corp(TGT) shot higher after reports that the two companies are in merger talks. Although, CNBC has raised questions (https://www.cnbc.com/2018/03/23/shares-of-target-and-kroger-jump-on-report-of-possible-merger-talks.html) about the likelihood of the such a hookup.

What are other markets doing?

The ICE U.S. Dollar Index fell 0.3%, with the dollar hitting its worst levels against the Japanese yen since the election of President Trump. Investors seek out the yen and gold in times of economic and political uncertainty. Gold prices rose $21, or 1.6%, to $1,348 an ounce.

European equities were weaker across the board, while Asian markets suffered heavy losses (http://www.marketwatch.com/story/asian-markets-strengthen-after-fed-raises-rates-2018-03-21).

Oil futures rose 0.8% to $64.78 a barrel.

(END) Dow Jones Newswires

March 23, 2018 11:03 ET (15:03 GMT)