Trade war fears slam stocks

U.s.-china standoff stirs alarm over global economy’s health

Stocks fell sharply Monday on Wall Street, knocking nearly 400 points off the Dow Jones Industrial Average.

The benchmark S&P

500 had its worst day in a week as the sell-off put the market deeper into the red for August. The selling was widespread, with technology companies and banks accounting for a big share of the decline.

Investors sought safety in U.S. government bonds, sending their yields tumbling. The price for gold, another traditional safe-haven asset, closed higher.

The trade war between the U.S. and China has rattled markets this month. Anescalationintensions between the world’s largest economies has stoked worries that the long-running conflict will undercut an already slowing global economy.

The latest wave of selling left the S&P 500 index down 35.56 points, or 1.2 percent, at 2,883.09. The Dow fell 389.73 points, or 1.5 percent, to 25,897.71. The average was briefly down 462 points.

The Nasdaq composite dropped 95.73, or

1.2 percent, to 7,863.41.

The Russell 2000 index of smaller company stocks lost 18.58 points, or 1.2 percent, to1,494.46.

The major indexes are down more than 3 percent for August. Even after this month’s stumble, they are up solidly this year, led by the Nasdaq with a gain of 18.5 percent. The S&P 500 is up 15 percent, but it’s down 4.7 percent from its all-time high set at the end of July.

Anxietyandfearover the U.s.-china trade war continues to hover over the market and has taken stocks on a wild ride in August.

The S&P 500 index zoomed up and down last week, ending with its second straight weekly loss. The swings follow President Donald Trump’s threat to impose more tariffs on “Trade and the concern that as this escalates it continues to wear on confidence to a point that this actually causes a recession, that’s what people are wrestling with,” said Ben Phillips, chief investment officer at Eventshares.

Chinese goods, followed by China’s move to allow its currency to weaken.

Trump has promised 10 percent tariffs on some $300 billion in Chinese imports that haven’t already been hit with tariffs of 25 percent. The new tariff would go into effect Sept. 1 and more directly affect U.S. consumers.

Last week, Trump said he would be “fine” if the U.S. and China don’t go ahead with a meeting next month, dampening investors’ hopes for a path to resolving the economically damaging trade war.

The longer the trade conflict drags on, the more it has the potential to threaten the weakening global economy by discouraging trade and causing businesses to pull capital spending plans on hold. The International Monetary Fund expects world trade to slow in 2019 for a second straight year.

“We’re hearing from management teams that there’s just caution on investing, especially globally,” said Ben Phillips, chief investment officer at Eventshares. “Multinationals are being very cautious. … Their view is if the rest of the world slows down, the U.S. won’t be insulated from that.”

Traders continued to shift money into bonds Monday, sending bond prices sharply higher. That pulled down the yield on the 10-year Treasury to 1.64 percent from 1.73 percent late Friday, a big move. The yield is used as a benchmark for interest rates on mortgages and other consumer loans.

The drop in bond yields weighed on financial sector stocks. Bank of America fell 2.4 percent, and Citigroup gave up 2.7 percent. Credit card issuer Synchrony Financial slid 3.9 percent and Capital One Financial dropped 2.3 percent.