Wall Street suffers biggest drop in six weeks as Dow, S&P and Nasdaq fall by around 3pc after Donald Trump signs China tariffs
Treasuries rose as investors shifted focus from the Federal Reserve to the threat of an escalating trade war that could disrupt global growth
US stocks dropped dramatically on Thursday, with each of the major Wall Street indexes suffering its biggest one-day percentage drop in six weeks, on the heels of an action by US President Donald Trump to impose tariffs on up to $60 billion of Chinese imports.
The Dow Jones Industrial Average fell 723.45 points, or 2.93 per cent, to 23,958.86, the S&P 500 lost 68.23 points, or 2.52 per cent, to 2,643.7 and the Nasdaq Composite dropped 178.61 points, or 2.43 per cent, to 7,166.68.
Meanwhile, treasuries rose as investors shifted focus from the Federal Reserve to the threat of an escalating trade war with China that has the potential to disrupt global growth.
“The market doesn’t like trade wars, the market doesn’t like that the Fed is adamant about raising rates,” said Matt Schreiber, president and chief investment strategist at WBI Investments in Red Bank, New Jersey.
“Yes the economy has been pretty strong, the labour market has less slack, but there’s nothing to really get fired up about and try to normalise rates to a level way above where we are.”
The threat that a tit-for-tat trade spat with China will erupt and hamper global growth has investors on edge a day after the Fed sought to reassure markets that it’s in no hurry to raise rates even as it lifted growth projections for the world’s largest economy.
Trump’s first trade action directly aimed at China comes as policymakers including IMF Managing Director Christine Lagarde warn of a global trade conflict that could undermine the broadest world recovery in years.
Stocks were also hit earlier when John Dowd resigned as Trump’s lead lawyer countering Special Counsel Robert Mueller’s Russia probe as the inquiry into possible collusion in the 2016 election intensifies.
Facebook Inc. helped pace a decline in the tech sector, falling 2.7 per cent. This week’s sell-off in tech stocks is on pace to be the worst since early February. Other notable decliners Thursday included Accenture Plc and Micron Technology Inc.
Elsewhere, West Texas oil fluctuated before falling and the Australian dollar slipped after the country’s unemployment rate climbed. The British pound initially jumped after the country’s central bank voted 7-2 to maintain interest rates, but pared as investors digested comments from policymakers that weren’t overtly hawkish.