U.S. stocks closed lower Tuesday, with the S&P 500 snapping its eight-day winning streak, on fears over escalation of trade tensions with the European Union and a weaker global outlook from the International Monetary Fund.
How did the benchmarks fare?
The Dow Jones Industrial Average DJIA, -0.72% dropped 190.44 points, or 0.7%, to close at 26,150.58, while the S&P 500 index SPX, -0.61% fell 17.57 points. or 0.6%, to 2,878.20. The Nasdaq Composite Index COMP, -0.56% declined 44.61 points, or 0.6%, to 7,909.28.
What drove the market?
The office of the U.S. Trade Representative threatened to levy tariffs on many European goods late Monday. The threat is a retaliation against European companies’ subsidies for aircraft manufacturer Airbus SE EADSY, -1.82% If the U.S. follows through, the proposed tariffs would affect about $11 billion in imports to the U.S., including helicopters, bicycles, cheese and wine.
Lighthizer said the Trump administration would wait for World Trade Organization clearance to implement the duties. President Donald Trump Tuesday morning tweeted that the EU has taken advantage of the U.S., adding that it would “soon stop!”:
The World Trade Organization finds that the European Union subsidies to Airbus has adversely impacted the United States, which will now put Tariffs on $11 Billion of EU products! The EU has taken advantage of the U.S. on trade for many years. It will soon stop!
— Donald J. Trump (@realDonaldTrump) April 9, 2019
The U.S.-EU tensions comes with the administration reportedly close to resolving a yearlong spat with China, which has roiled markets amid fears the clash between the world’s largest economies could disrupt global economic growth.
The IMF lowered the outlook for global economic growth in 2019 to 3.3% from 3.5% projected in January, marking its third reduction of growth expectations in six months.