Stocks fell broadly on Wall Street in afternoon trading Monday after President Donald Trump threatened to escalate the trade war between the U.S. and China.
Investors have been expecting the world’s two largest economies to resolve their damaging trade dispute, with the two sides set to meet this week in Washington. Hopes for an accord have contributed to the big run-up in stock prices in the U.S. and China so far this year. The S&P 500 and Nasdaq hit all-time highs last week.
U.S. companies with heavy business interests in China were getting hit the hardest, particularly technology and industrial companies. Banks also fell sharply. The market’s slide followed a sell-off in Europe and Asia.
The Dow Jones Industrial Average fell 159 points, or 0.6%, to 26,345 as of 2:20 p.m. Eastern Time. It was down as much as 471 in the first few minutes of trading.
The S&P 500 index dropped 0.7% and the Nasdaq slid 0.9%.
Trump threatened on Sunday to raise tariffs on imports from China to 25% from 10%, saying that trade talks were moving too slowly. He also threatened to impose tariffs on another $325 billion in imports from China, covering everything the country ships annually to the United States.
Tariffs currently in place have already raised costs on goods for companies and consumers.
The latest developments shook investors’ recent optimism that Washington and Beijing were close to working out a trade deal. Still, the initial wave of selling Monday did ease somewhat as the day went on, which signals that investors’ trade deal hopes haven’t dimmed entirely.
“You’ve seen that the sell-off has been so far contained and part of that is the perception that the president has done this before,” said Marina Severinovsky, investment strategist at Schroders.
She still expects a deal to be struck sometime in the next two months and