Tariffs, Trump tweet send stocks tumbling
Trouble for technology companies set off a rout Monday as markets were also rattled by growing fears about a trade war with China.
It was a broad sell-off in which a tweet from President Donald Trump about Amazon.com played a role.
The Dow Jones industrial average plunged more than 758 points at its low in afternoon trading before clawing back some of its losses. It finished the day down 459 points, or 1.9 percent.
The Standard & Poor’s 500-stock index was down 2.23 percent, and the techheavy Nasdaq Composite was down 2.74 percent as volatility continues to rock markets.
All three indexes are negative for the year. The Dow and S&P 500 are in correction territory. A correction is generally considered a 10 percent drop from its peak. The price of gold and of silver, both considered flights to safety, were up on Monday.
Ten of the 11 stock sectors closed in correction territory Monday. Consumer staples was leading the downhill march, followed by information technology, financial services, health care and industrials.
China’s government said on Sunday that it would immediately impose tariffs on 128 U.S. commodities it imports in retaliation for Trump’s levies on steel and aluminum. The tax on U.S. goods could include pork, soybeans and fruit as well as aircraft.
The fears of an impending trade war have rocked markets since Trump announced 25 percent tariffs on steel and 10 percent on aluminum that the United States imports.
“It’s three things — technology stocks, trade concerns and economic growth numbers — slowing down,” said James Norman, head of equity strategy at QS Investors. “With stretched valuations, investors are becoming concerned that they are overpaying for potential growth.”
Two manufacturing indexes reporting Monday showed that economic growth may be slowing. The Institute for Supply Management’s manufacturing index and the Purchasing Managers Index for manufacturing both missed expectations, adding to market shivers.
In a Monday note to clients, Jason Pride, chief investment officer for private clients at Glenmede Wealth Management, cited festering trade war fears as a driver in the market’s volatility.
“The Trump administration’s announcements on trade sanctions in total so far encompass a relatively small portion of overall U.S. trade,” according to Pride’s note. “However, this could only be the beginning, as the Trump administration ponders the extension of further sanctions on the Chinese trade relationship.”
Troubles for technology companies are a big factor driving stocks lower. Markets were hampered Monday by Trump’s Twitter assault on Amazon.com, his third such tweet since Thursday, in which he knocked the retailer’s relationship with the U.S. Postal Service.
Amazon stock down 5.2 percent. ended