Dow falls 500 points over fears of escalating US-China trade war
- Near 1.40pm, the Dow Jones Industrial Average was down 2.0 per cent at 25,901.59
- Pullback suggests some investors fear latest back-and-forth between Trump and Beijing could pose serious obstacle to deal
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Losses on Wall Street deepened on Tuesday afternoon as the latest trade dust-up between Beijing and Washington raised fears about the prospects for agreement after months of conflict.
Near 1.40pm, the Dow Jones Industrial Average was at 25,901.59, down more than 530 points, or 2.0 per cent.
The broad-based S&P 500 also fell 2.0 per cent to 2,874.46, while the tech-rich Nasdaq Composite Index slid 2.3 per cent to 7,935.33.
Hopes the United States and China can seal a trade deal took a hit over the weekend when President Donald Trump threatened to raise tariffs on Chinese imports.
Beijing has decided to proceed with key trade talks later this week but the White House now says US duties on US$200 billion in Chinese merchandise will more than double on Friday.
Investors have generally viewed the Trump threats as a bargaining tactic, yet Tuesday’s pullback suggested some fear the latest back-and-forth could pose a more serious obstacle.
“The new tariffs have caught the market off guard,” said Quincy Krosby, chief market strategist of Prudential Financial. “The question becomes, What will the Chinese do?”
The new tariffs have caught the market off guard … The question becomes, What will the Chinese do?
Industrials were a hard-hit sector, with Caterpillar shedding 2.9 per cent, United Technologies 3.0 per cent and 3M 2.2 per cent.
Technology companies also fell, with Apple losing 2.9 per cent and Microsoft and Facebook both 2.5 per cent.
