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. International markets suffered steeper losses. Hong Kong’s Hang Seng index sank 2.8 percent, its biggest decline since February, and Germany’s DAX lost 1.2 percent.
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.
Kate Warne, investment strategist for Edward Jones, said investors are concerned about what they’re seeing, but they still think the U.S. and China will work out their differences.
“There’s concern but there’s not overall great worry at this stage,” she said. “We are certainly taking the first steps toward a trade war and the more tit-for-tat actions are taken the harder it is to pull back.”
In Europe, the CAC 40 of France fell 1.1 percent and in London the FTSE 100 slipped 0.4 percent. The losses were even heavier in Asia, where Tokyo’s Nikkei 225 retreated 1.8 percent and Seoul’s Kospi gave up 1.5 percent.
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.
Aerospace company Boeing dropped 3.8 percent to $341.12 and construction and mining equipment maker Caterpillar shed 3.6 percent to $143.30 while Apple fell 1.6 percent to $185.69. 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.
The euro sank to $1.1575 from $1.1615. The dollar fell to 110.07 yen from 110.44 yen.
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 effort to stop the ban in exchange for a big fine and other penalties.
U.S. companies that supply ZTE also fell. Acacia Communications gave up 3.7 percent to $33.94.
Health care companies edged higher. CVS Health jumped 4.5 percent to $70.77 after the drugstore chain and pharmacy benefits manager said it will start making home deliveries of prescriptions and other items.
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.
Gold fell 0.1 percent to $1,278.60 an ounce. Silver lost 0.7 percent to $16.32 an ounce. Copper sank 1.9 percent to $3.05 a pound.