The Dow Jones Industrial Average tumbled more than 400 points Thursday as investors worried that the U.S. and China are headed for a long standoff in their costly trade dispute.
The broad sell-off, which followed a slide in global markets, placed the benchmark S&P 500 index on track for its third straight weekly loss. Traders sought safety in the bond market, driving bond prices higher, which pulled the yield on the 10-year Treasury to 2.30%, the lowest level in more than a year.
The market has been highly volatile since Washington and Beijing escalated their dispute over trade earlier this month. The two sides have broken off negotiations and appear set for a long standoff. Investors are concerned a prolonged trade war could stunt economic growth and hurt corporate profits.
Trade-sensitive technology stocks again led the losses. Many tech companies do significant business in China and this week face the additional headwind of the Trump administration’s proposed restrictions on technology sales to Chinese companies. Apple fell 1.7%.
Chipmakers, including Advanced Micro Devices, Broadcom and Nvidia, slumped. An S&P index that tracks the performance of makers of chips and chip equipment has plunged about 16% so far this month amid the heightened trade tensions.
Banks also fell broadly in the sell-off. JPMorgan and Bank of America each slid 2.7%.
Energy stocks slumped as the price of U.S. oil plunged 5.8% to $57.88 a barrel and is down 8% for the week. Exxon fell 3.1% and Chevron lost 2.8%.
Investors fled to safer holdings. Utilities and real estate were the only sectors showing gains. Utilities are considered less of an investment risk and more money gets shifted into those stocks when investors are concerned about volatility and a slowdown in economic growth.
The U.S. and China concluded their 11th round of trade talks earlier this month with no agreement. Instead, the U.S. moved to increase tariffs on Chinese goods, prompting China to reciprocate. The trade dispute escalated further after the U.S. proposed restrictions on technology sales to China, though it has temporarily backed off.
China is looking for ways to retaliate and has reached out for support from Russia and its neighbors in Asia. Both the U.S. and China have made overtures about continuing trade talks, but none are scheduled.
The resumption of trade hostilities this month has interrupted a market rally that saw the S&P 500 hit a record and wipe out the sharp decline from the fourth quarter of last year. The index is down 4.7% so far in May, though it’s still sporting a gain of 12% for the year.
KEEPING SCORE: The S&P 500 index was down 1.6% as of 1:47 p.m. Eastern Time. The Dow fell 402 points, or 1.6%, to 25,374. The Nasdaq composite dropped 1.9%. The Russell 200 index of small company stocks gave up 2%.
Markets in Asia and Europe also saw steep losses.
BRAZIL CALLING: Avon shares rose 2.7% after Brazilian cosmetics maker Natura announced that it is buying the beauty products company for $3.7 billion in stock.
The deal would create the world’s fourth-largest group of beauty products. Natura also currently owns retail stores like The Body Shop.
ENTICING PROFIT: L Brands surged 13% after blowing away Wall Street’s first quarter earnings forecasts.
The company, which also owns Bath & Body Works, gave investors a surprise profit on better-than-expected revenue.