Dow posts 6th loss in row on trade spat; small cos. rally

NEW YORK—Big industrial and technology companies skidded Tuesday as the trade dispute between the U.S. and China threatened to come to a boil. Smaller companies less focused on overseas trade fared better, as did dividend-paying stocks.

The Dow Jones industrial average fell for the sixth day in a row and lost 287.26 points, or 1.1 percent, to 24,700.21. The S&P 500 index gave up 11.18 points, or 0.4 percent, to 2,762.57. The Nasdaq composite fell 21.44 points, or 0.3 percent, to 7,725.59.

Oil and copper fell. Both are commodities that would be susceptible if a trade dispute caused a slowdown in global economic growth. Cautious investors moved money into bonds.

President Donald Trump told the U.S. Trade Representative to identify $200 billion in goods for a potential 10 percent tax, and China said it would respond with duties of its own. In a statement, Trump said that if China retaliated, he would order yet another $200 billion in tariffs. China doesn’t import enough goods from the U.S. to match the scale of Trump’s proposals, but could sanction U.S. products or companies through other means.

Just days ago, the U.S. and China each announced 25 percent taxes on $50 billion in imports from the other. While the dollar amounts are rising rapidly, the countries still have time to negotiate, as the previously announced tariffs won’t take effect until July 6.

Stocks took bigger losses early in the day, as the Dow fell as much as 419 points. Smaller and more domestically-focused companies recovered and finished with small gains, and big-dividend companies like consumer products companies rose as well. The Russell 2000 index gained 0.99 points, or 0.1 percent, to a record 1,693.45. That index is up 10.3 percent this year while the S&P has risen 3.3 percent and the Dow has taken a small loss.

Industrial and technology companies took some of the worst losses as investors worried that the dispute could grow more intense and drag down global economic growth. The dollar also got stronger, and the ICE-US Dollar Index hit its highest level since July. That makes U.S. goods more expensive in other markets.

Companies that make cars, steel and aluminum and chemicals also took heavy losses. So did shares of Chinese companies listed in the U.S. E-commerce company Alibaba slid 2 percent to $204.43 and search engine Baidu declined 2.5 percent to $262.11.

Bond prices climbed as investors turned more cautious. The yield on the 10-year Treasury note fell to 2.89 percent from 2.92 percent. The yield on the 10-year note is just 0.35 percentage points higher than the yield on the 2-year, the smallest it’s been since the summer of 2007. For economists, the gap starts flashing a warning signal when short-term Treasurys are yielding more than their long- term counterparts. That’s a scenario called an “inverted yield curve,” and it has preceded each of the last seven recessions.

Shares of Chinese telecom giant ZTE fell 24.8 percent in Hong Kong after the U.S. Senate sought to restore a ban that prevents the company from buying U.S. components for seven years. The Senate’s move would block a White House plan to stop the ban in exchange for a big fine and other penalties.

U.S. companies that supply ZTE also sank. Acacia Communications gave up 3.7 percent to $33.94.

As the dollar gained strength and investors worried about economic growth, oil prices turned lower. U.S. crude fell 1.2 percent to $65.07 a barrel in New York, and Brent crude, the international standard for oil prices, fell 0.3 percent to $75.08 a barrel in London.

In other energy trading, wholesale gasoline shed 0.8 percent to $2.04 a gallon. Heating oil lost 0.5 percent to $2.12 a gallon. Natural gas fell 1.7 percent to $2.90 per 1,000 cubic feet.