U.S. stocks fell on Thursday after the United States moved to impose metal tariffs on imports from Canada, Mexico and the European Union, prompting a tit-for-tat response from some of its trading partners.
Indeed, the Dow plunged 300 points in late trading after the European Union and Canada said they would retaliate against U.S. tariffs.
U.S. Commerce Secretary Wilbur Ross said a 25 percent tariff on steel imports and a 10 percent levy on aluminum imports from its allies would come into effect on Friday.
Mexico retaliated with “equivalent” measures on farm and industrial products, targeting pork legs, apples, grapes and cheeses as well as steel.
The S&P 500 packaged foods and meats index dipped 2.3 percent with all its 10 components in the red. Kraft Heinz (KHC.O) and Mondelez (MDLZ.O) were the biggest lags on the index.
The S&P Composite 1500 Steel index rose 0.3 percent, led by gains in AK Steel (AKS.N) and US Steel (X.N) although it pared early gains after Mexico’s retaliation.
Shares of Boeing (BA.N) slipped 1.3 percent and Caterpillar (CAT.N) declined 1.9 percent, dragging down the Dow Jones Industrials.
“The market is worried about retaliation, they are looking for what would come from the EU side,” said Zhiwei Ren, managing director and portfolio manager at Penn Mutual Asset Management in Horsham, Pennsylvania.
“But this is another negotiation tactic on the U.S. side and they want to use tariffs as a bargaining tool for other negotiations.”
Friction between the United States and its trading partners have roiled financial markets, especially after President Donald Trump in March decided to impose the metal tariffs.
Adding to the trade worries was a report that Trump aimed to push German carmakers out of the United States altogether, after launching a national security probe last week into car and truck imports.
Entering the last two hours of trading, the Dow Jones Industrial Average was down 288 points, or 1 percent, at 24,379, the S&P 500 slid 20 points, or 0.7 percent, to 2,705 and the Nasdaq Composite fell 20 points, or 0.3 percent, to 7,441.
Nine of the 11 major indexes were in the red, led by declines in the industrial stocks.
S&P technology index .SPLCT jumped 0.48 percent, helped by a 2.3 percent gain in shares of Alphabet Inc (GOOGL.O) and 2.3 percent rise in Facebook (FB.O).
The biggest percentage gainer on the S&P 500 was General Motors (GM.N), which surged 10.4 percent after Japan’s SoftBank Group (9984.T) decided to invest $2.25 billion in its autonomous vehicle unit.
Dollar General (DG.N) declined about 8.3 percent and Dollar General (DLTR.O) dropped 12 percent after both discount retailers missed Wall Street estimates for their quarterly same-store sales.
Declining issues outnumbered advancers for a 1.88-to-1 ratio on the NYSE and for a 1.50-to-1 ratio on the Nasdaq.
The S&P index recorded 19 new 52-week highs and nine new lows, while the Nasdaq recorded 129 new highs and 36 new lows.
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