Stocks fell sharply Thursday following the Trump administration’s move to place tariffs on some goods imported from China and restrict Chinese investment, with the Dow Jones Industrial Average falling about 740 points at its lowest, and losing nearly 3 percent of its value.
Other markets dove, too, with S&P 500 and Nasdaq both falling by more than 2 percent.
It is the market’s worst day since February, when Dow suffered its biggest one-day drops ever in successive days. The Dow dropped below 25,000 and moved into correction territory.
The Dow closed at 23,595, plunging 723 points, or 2.93 percent. The S&P 500 fell 68 points, or 2.52 percent, closing at 2,644. The Nasdaq lost 179 points, or 2.43 percent, closing at 7,167.
After the Trump administration announced new tariffs, the Chinese government said it will defend itself and investors fear that trade tensions will spike between the world’s largest economies. Industrial and technology companies took some of the worst losses while banks dipped along with interest rates. Stock indexes in Europe took sharp losses as well.
TRADE WORRIES: The Trump administration will impose restrictions on Chinese investment and tariffs on some $48 billion worth of Chinese imports.
China’s Commerce Ministry said the country will defend its interests. Earlier this month the Trump administration ordered tariffs on imported steel and aluminum, and stocks dropped as investors worried about the possibility of tougher restrictions on international trade and smaller profits for corporations.
Their fears eased when the administration said some countries will be exempt from the tariffs. That continued Thursday, as U.S. Trade Representative Robert Lighthizer said the tariffs won’t apply to the European Union , Canada, Mexico, Argentina, Brazil and Australia.
Industrial companies have also been hit by worries about trade because they face a combination of higher prices for imported metals that they use to make their machinery and potential restrictions on sales overseas. On Thursday construction equipment maker Caterpillar fell $4.70, or 3 percent, to $151.10 and aerospace company Boeing slid $10.64, or 3.2 percent, to $326.46.
Investors also sold some of the market’s biggest winners. Among technology companies, Facebook fell $3.40, or 2 percent, to $165.99 and Alphabet, Google’s parent company, fell $27.25, or 2.5 percent, to $1,066.75. Amazon slid $26.19, or 1.7 percent, to $1,555.67.
OVERSEAS REACTION: Germany’s DAX lost 1.9 percent and the CAC 40 in France shed 1.7 percent. Britain’s FTSE 100 dropped 1.3 percent. Hong Kong’s Hang Seng dropped 1.1 percent. The Nikkei 225 in Japan index gained 1 percent and the South Korean Kospi added 0.4 percent.
BONDS: Bond prices climbed, sending yields lower. The yield on the 10-year Treasury note slipped to 2.83 percent from 2.88 percent late Wednesday. When yields and interest rate decrease, banks make smaller profits on loans. Bank of America lost 82 cents, or 2.6 percent, to $31.05 and JPMorgan Chase gave up $2.41, or 2.1 percent, to $112.33.
Utility companies moved higher. When bond yields decline, investors often buy utilities, real estate investment trusts, and other stocks that pay big dividends.
The decline in rates comes a day after the Federal Reserve raised interest rates and said the U.S. economy and the job market continued to improve over the last two months. The Fed expects to raise rates three times this year, although some investors think a fourth increase is possible. The Fed also said it might raise rates three more times next year instead of two.
ABBVIE TUMBLES: AbbVie plunged after it reported disappointing results from a study of its cancer therapy Rova-T. AbbVie canceled its plans to ask for faster approval of Rova-T as a treatment for small cell lung cancer , but other studies are continuing. AbbVie shed $14.22, or 12.6 percent, to $98.23. Other health care stocks also sank. Johnson & Johnson fell $2.09, or 1.6 percent, to $129.10 and Amgen declined $3.49, or 1.9 percent, to $178.10.
ENERGY: Benchmark U.S. crude shed 76 cents, or 1.2 percent, to $64.41 a barrel in New York. Brent crude, used to price international oils, lost 66 cents, or 1 percent, to $68.41 a barrel in London.
CURRENCIES: The dollar fell to 105.70 yen from 106.10 yen. The euro rose to $1.2310 from $1.2332.
AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP . His work can be found at https://apnews.com/search/marley%20jay
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