Stocks dive as China adds tariffs
Protectionist trade policies, tech firms’ problems hurt markets
NEW YORK — Stocks tumbled Monday after China raised import duties on a number of U.S. exports, bringing the two economic giants closer to a full-on trade war.
Big technology companies, long investor favorites, also suffered heavy losses.
The deepening worries over newly protectionist U.S. trade policies, combined with blowback toward technology companies, including Facebook, because of its ever-widening privacy scandal, have prompted investors to pull money out of the market. That has meant steep drops in former big winners, including Netflix, Microsoft and Alphabet, Google’s parent company.
Among other recent winners, Intel dived 6.1 percent after a report in Bloomberg News that Apple plans to start using its own chips in Mac computers, and Amazon sank after more broadsides from President Donald Trump on Twitter.
The Dow Jones industrial average was down as much as 758 points, although major indexes regained some of their losses later in the afternoon. The Dow closed down 458.92 points, or 1.9 percent, to 23,644.19. The S&P
500 index gave up 58.99 points, or 2.2 percent, to 2,581.88. The Nasdaq composite slumped 193.33 points, or 2.7 percent, to 6,870.12. The Russell 2000 index of smaller-company stocks fell 36.90 points, or 2.4 percent, to 1,492.53.
After a month of public negotiations between the U.S. and several other countries, Monday marked the first time another country has placed tariffs on U.S. goods in response to the Trump administration’s recent trade sanctions.
Kate Warne, an investment strategist for Edward Jones, said the step by China is small but significant.
“The fact that a country has actually raised tariffs in retaliation is an important step in the wrong direction,” she said. “The tariffs imposed by China today lead to greater worries that we will see escalating tariffs and the possibility of a much bigger impact than investors were anticipating last week. And that could be true for Mexico as well as for China.”
Food maker Tyson dropped 6.2 percent after China raised import duties on a $3 billion list of U.S. goods in response to the tariffs on imported steel and aluminum that President Trump ordered last month.
The Dow is now down 4.3 percent for the year, and the S&P 500 is off 3.4 percent so far in 2018, according to The Wall Street Journal. With Monday’s tumble, the Nasdaq Composite Index on Monday is down about a half-percent for this year.
Amazon fell 5.2 percent Monday. The online retailer has slumped with the market recently, although it’s still up about 17 percent in 2018. Trump has repeatedly criticized Amazon over issues including taxes and Amazon’s shipping deals with the U.S. Postal Service.
Jack Ablin, chief investment officer of Cresset Wealth Advisors, said Amazon is just the latest company to falter after it drew scrutiny from the government, as Facebook and Alphabet have slumped recently on data privacy concerns.