US stocks slumped on Monday, with the blue-chip Dow Jones Industrial Average falling over 350 points, after President Donald Trump shocked investors by threatening to hike tariffs on Chinese goods this week, sparking a flight from riskier assets.
Trump said on Sunday tariffs on $200 billion worth of Chinese goods would increase to 25% from 10%, reversing a decision he made in February to keep them at 10% as the two sides made progress on trade talks.
China said on Monday a delegation is still preparing to go to the United States, but did not mention if Vice Premier Liu He, China’s lead official in the negotiations, will be part of the delegation as originally planned.
The tariff threat rekindled fears of a global economic slowdown, sending oil prices lower and halting a recent rally that propelled the S&P 500 and the Nasdaq indexes to record highs.
Boeing, the single largest US exporter to China, fell 2.5%, while chipmakers, which get a good portion of their revenue from China, tumbled.
The Philadelphia chip index slid 2.63%, while the broader technology sector fell 1.60%, the most among the 11 major sectors trading lower.
Apple Inc. slid 2.2%, and dragged on the tech sector, while other marquee names such as Amazon, Microsoft and Facebook fell more than 1% and weighed on markets.
“I don’t think it was done so flippantly to suggest Trump will not follow through with it, but there is an element of it being a negotiation tactic,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
“These things are used as an excuse for investors to take profits because we have had such an enormous rally and valuations are relatively high and the impetus was on news to continue to be good and obviously this is not welcome news.”
Wall Street’s fear gauge, the CBOE Volatility index, spiked to its highest level in nearly two months.
At 9:44 a.m. ET, the Dow Jones Industrial Average was down 351.27 points, or 1.33%, at 26,153.68, the S&P 500 was down 35.79 points, or 1.22%, at 2,909.85. The Nasdaq Composite was down 114.54 points, or 1.40%, at 8,049.46.
Automaker General Motors declined 2.8%, while Ford Motor dropped 1.3%.
Tesla slipped 1.5%, also weighed down by US trade officials rejecting the company’s bid for relief from tariffs on the Chinese-made Autopilot “brain” of its Model 3 and other electric vehicles.
In a bright spot, Anadarko Petroleum rose 3% after Occidental Petroleum increased the cash component of its $38 billion bid, removing a requirement for any deal to receive the approval of Occidental’s shareholders.
Occidental is trying to convince Anadarko to accept its offer and abandon the agreed $33 billion sale to Chevron. The oil major was up 1%, the only gainer among Dow components.
Declining issues outnumbered advancers for a 6.15-to-1 ratio on the NYSE and for a 5.11-to-1 ratio on the Nasdaq.
The S&P index recorded five new 52-week highs and two new lows, while the Nasdaq recorded nine new highs and 24 new lows.
