Stock market winces at trade war worries

Dow slumps 1.7%, while S&P wipes out much of year’s gains

NEW YORK — U.S. stocks dove in another dizzying day of trading after President Donald Trump promised stiff tariffs on imported steel and aluminum.

The move raised the threat of escalating retaliation by other countries and higher inflation. The Standard & Poor’s 500 index erased nearly all of its gains for the year.

Trump told industry executives around midday that they’ll “have protection for the first time in a long while” and that he’s planning to impose tariffs of 25 percent on steel imports and 10 percent on aluminum imports next week.

“I don’t know if this will cause a trade war, and obviously that’s the fear,” said Lamar Villere, portfolio manager at investment manager Villere & Co. “But this is exactly what candidate Trump said he would do: He said he would be very protectionist and America First.”

The Standard & Poor’s 500 index tumbled 1.3 percent, to 2,677.67. It’s the third straight day where the index has lost at least 1 percent. It had only four such days last year. The S&P 500 is now up just 0.2 percent for the year after having its best January in 20 years.

The Dow Jones industrial average dropped 1.7 percent, to 24,608.98.

Stocks had been higher earlier in the day after Federal Reserve Chairman Jerome Powell testified before Congress and appeared to calm one of the market’s main worries: that the Fed may get more aggressive about raising interest rates to beat down inflation amid the strengthening economy.

Worries about potentially higher rates and inflation have reintroduced markets to volatility following their unusually calm run in 2017. The concerns at one point helped knock the S&P 500 down 10 percent from its record high, set in late January.