Stocks decline as trade war heats up

Global stock indexes sank Wednesday after the Trump administration released a list of $200 billion worth of goods that the U.S. could hit with tariffs and China said it would retaliate. The dollar jumped, and big exporters plunged.

Companies that sell computer chips, oil, basic materials and heavy machinery dropped after the Trump administration proposed a 10% tax on a wide list of imports. It is scheduled to make a decision on the potential tariffs after Aug. 31.

China’s government said it will take “firm and forceful measures” if the new tariffs are enacted. That response probably would include measures other than tariffs. Trump has threatened to put new taxes on almost everything the United States imports from China.

Jack Ablin, chief investment officer for Cresset Wealth Advisors, said the tariffs can have big effects: A tariff on an import from one country can lead to broad price increases for similar items, and rising taxes and costs might lead companies to change their supply lines in less efficient ways.

“When you start adding all of that together, you end up with typically higher inflation and low productivity,” he said. “Higher inf lation tends to rob consumers of their income, and lower productivity tends to rob companies of their profits.”

A four-day winning streak for the Standard & Poor’s 500 index ended, with the benchmark index sinking 19.82 points to 2,774.02. The Dow Jones industrial average fell 219.21 points to 24,700.75. The Nasdaq composite fell 42.59 points to 7,716.61. The Russell 2000 fell 11.96 points to 1,683.66.

The decline came the day after the S&P 500 closed at a five-month high.

The new list of U.S. tariff targets doesn’t include U.S.branded smartphones and laptops. Still, chipmakers, which make large portions of their sales in China, slumped. Nvidia fell 2.3% to $247.53. Micron Technology slid 2.8% to $54.18.

Construction equipment maker Caterpillar declined 3.2% to $136.76. Farm equipment maker Deere fell 2.2% to $141.42.

The ICE U.S. dollar index jumped 0.6%, a large move. The dollar rose sharply against Japan’s currency, increasing to 112.04 yen from 111.28 yen. The euro fell to $1.1674 from $1.1745.

The stronger dollar hurts exporters because it makes U.S. goods and commodities more expensive in other markets. Crude oil prices tumbled partly because of the rising dollar and partly because Libya said it will start exporting oil again.

Benchmark U.S. crude fell 5% to $70.38 a barrel. Brent crude plunged 6.9% to $73.40 a barrel in London.

Airlines took sharp losses after American said it expects slower fare growth in the United States. American Airlines slumped 8.1% to $35.96. United Continental slid 3.4% to $68.88.

Bond prices rose. The yield on the 10-year Treasury note fell to 2.84% from 2.87%. The decline in bond yields helped utility companies, which tend to pay large dividends, make small gains.

Gold fell 0.9% to $1,244.40 an ounce. Silver fell 1.7% to $15.82 an ounce. Copper slid 3.4% to $2.74 a pound.

Wholesale gasoline fell 4.6% to $2.06 a gallon. Heating oil sank 5.4% to $2.10 a gallon. Natural gas rose 1.5% to $2.83 per 1,000 cubic feet.