Stocks dive on trade war fears after China sanctions
NEW YORK — Stocks plunged Thursday after the Trump administration slapped sanctions on goods and investment from China. The Dow Jones industrial average dropped more than 700 points as investors feared that trade tensions between the world’s largest economies would escalate.
The planned sanctions include tariffs on $48 billion worth of Chinese imports as well as restrictions on Chinese investments. President Donald Trump said he’s taking those steps in response to theft of American technology, and the Chinese government said it will defend itself. Investors are worried that trade tensions would hurt U.S. companies and harm the world economy.
On Thursday, they fled stocks and bought bonds, which sent bond prices higher and yields lower. With interest rates falling, banks took some of the worst losses. Technology and industrial companies, basic materials makers and health care companies also fell sharply.
Peter Donisanu, an investment strategy analyst for the Wells Fargo Investment Institute, said the risk of a damaging trade war is still low because the Trump administration is targeting specific goods that aren’t central to China’s economy. That could change if it puts tariffs on products like electronics or
appliances imported from China.
“If the Trump administration really wanted to hurt China and start a trade war, then they would go after those larger sectors,” he said. Still, Mr. Donisanu said that after last year’s rally, investors are looking for new reasons to feel optimistic about stocks. With trade tensions in focus over the last month, they’ve had trouble finding any.
The S&P 500 index skidded 68.24 points, or 2.5 percent, to 2,643.69. The Dow Jones industrial average sank 724.42 points, or 2.9 percent, to 23,957.89. The Nasdaq composite gave up 178.61 points, or 2.4 percent, to 7,166.68. The Russell 2000 index of smaller-company stocks lost 35.43 points, or 2.2 percent, to 1,543.87.
Investors sold some of the market’s biggest recent winners. Among technology companies, Microsoft fell $2.69, or 2.9 percent, to $89.79 and Alphabet, Google’s parent company, fell $40.85, or 3.7 percent, to $1,053.15.
Pittsburgh regional stocks declined on a broad front. They were paced by metals issues, which were buffeted by news that more countries will be excluded from penalties on steel and aluminum imports that take effect Friday. U.S. Steel was the biggest loser among regional stocks. The Pittsburgh steel producer’s shares dropped 11 percent to finish at $34.50, down $4.26.
Other stocks registering the largest percentage declines included Pittsburgh aluminum producer Alcoa, down $3.03 to $44.92, and specialty metals producer Allegheny Technologies, which closed at $24.14, off $1.61. Bridgeville specialty steelmaker Universal Stainless & Alloy Products shed $1.30 to close at $26.22.
Telecommunications gear provider Black Box was among the few regional stocks to advance, closing at $2.30, up 5 cents.
Mr. Donisanu, of Wells Fargo, said the Trump administration isn’t hostile to trade necessarily, but wants to get other countries to revise the terms of America’s trade deals.
“This is probably intended to get China to get more serious in discussions around violations of intellectual property rights and addressing those issues,” he said.