Stocks plunge as investor anxiety spikes over trade

A top White House trade official downplayed reports the Trump administration was making plans to block Chinese investments in American tech companies, comments that eased escalating trade tensions and helped U.S. stocks close well off their lows.

Confusion over the administration’s China trade policy related to technology caused a sell-off that pushed the Dow Jones industrial average down nearly 500 points before it recovered and finished down 328 points, or 1.3 percent, at 24,253.

Investors began dumping stocks after trade fears were ratcheted up by reports that Trump planned to curb Chinese purchases of U.S. tech companies, as well as curtailing American technology sales to China, the latest salvo in a skirmish that Wall Street fears will morph into a full-blown trade war. But in an afternoon interview on CNBC, Peter Navarro, a trade advisor to the president, said there “were no plans to impose investment restrictions” on China or any other countries. Despite the comments, the Dow still fell for the ninth time in the past 10 sessions.

Investors who once downplayed the tit-for-tat trade dispute between the U.S. and its trade partners as a Trump negotiating ploy are now confronted with the reality some of the tariffs are in effect, causing companies to change business plans and warn of weaker profits, says Kate Warne, chief market strategist at St. Louis-based brokerage firm Edward Jones.

U.S. stocks sold off broadly, as large stocks in the Standard & Poor’s 500 fell 1.4 percent, shares of small companies in the Russell 2000 tumbled 1.7 percent and the technology-packed Nasdaq slid 2.1 percent.

The most popular tech stocks – dubbed “FAANG” – got slammed. Facebook was down 2.7 percent, Amazon was off 3.1 percent, Apple slid 1.5 percent, Netflix plunged 6.5 percent and Google parent Alphabet was off 2.6 percent. The industry sell-off was over concerns Chinese computer network gear used by the U.S. tech giants could be the next group of products to be subject to U.S. tariffs, Panjiva Research said.