Tech firms lead slide as trade fears sink stocks

A slide in technology companies helped pull U.S. stocks lower Monday, snapping a five-day winning streak for the market.

The sell-off came amid speculation that the Trump administration was preparing to impose tariffs on another $200 billion worth of Chinese goods. The two governments have already imposed 25 percent tariffs on $50 billion of each other’s goods, and another round of tariffs would represent a significant escalation in the trade dispute between the world’s two largest economies.

“It’s definitely a setback for the market that they can’t seem to get to the table,” said JJ Kinahan, chief market strategist for TD Ameritrade. “It’s in everybody’s best interest to reach some kind of pragmatic decision.”

Investors used the prospect of a deeper U.S.-China trade conflict to take some profits, especially in technology stocks, the market’s biggest gainers this year. Department stores and other consumer-focused companies also accounted for a big slice of the losses. Safe-play sectors like real estate and utilities rose. Oil prices fell, erasing early gains.

The S&P 500 index fell 16.18 points, or 0.6 percent, to 2,888.80. The Dow Jones Industrial Average lost 92.55 points, or 0.4 percent, to 26,062.12.

The tech-heavy Nasdaq composite gave up 114.25 points, or 1.4 percent, to 7,895.79. The Russell 2000 index of smaller companies fell 18.17 points, or 1.1 percent, to 1,703.55. Most stocks closed lower on the New York Stock Exchange.

The U.S. has been locked in an escalating trade dispute with China, it’s biggest trading partner. Washington contends that Beijing uses predatory tactics to acquire technology know-how in an effort to overtake America’s global supremacy in technology.

Over the last few weeks it looked like the two countries were about to resume talks. This weekend, news reports indicated that the White House was set to announce tariffs on $200 billion more in Chinese imports as soon as Monday.

A new round of tariffs had been anticipated for some time, but the market had yet to react to that possibility before Monday, Kinahan said.

Beijing has said it would swiftly retaliate against additional U.S. tariffs. Technology companies seem especially vulnerable to retaliation from the Chinese government, which could include tariffs on components as well as restricting access to websites and services, Kinahan said.

Still, any new tariffs won’t completely close off the possibility of talks between the two sides, Kinahan noted.

The uncertainty over the trade dispute has at times roiled the market, but not derailed it from notching gains on the strength of strong corporate earnings and a growing U.S. economy.