(Reuters) - U.S. stocks slid on Wednesday, led by industrial shares, after Washington’s threat to impose tariffs on an additional $200 billion worth of Chinese goods raised fears of an escalating trade war.
U.S. officials on Tuesday issued a list of thousands of Chinese imports that the Trump administration wants to target with new tariffs. In response, China accused the United States of bullying and warned it would hit back.
The biggest drags on the blue-chip Dow were Boeing, 3M, Caterpillar and Chevron. Their shares were down between 1.2 percent and 2 percent.
Ten of the 11 major S&P 500 sectors were also lower. The S&P industrials sector tumbled 1.21 percent, making it the biggest decliner and drag on the benchmark S&P.
“The market is primarily focused on the potential trade war. However, the fundamentals are just too strong to be shaken by geopolitical events,” said Kevin Miller, chief investment officer of asset management company E-Valuator Funds.
Miller said during the back and forth on tariffs between the United States and China, the Shanghai market has fallen 16 percent for the year, while the S&P 500 index is still up about 4 percent, indicating that U.S. markets were holding up much better.
But Morgan Stanley told clients that the approaching U.S. earnings season could also trigger a new wave of risk aversion if firms start warning of slower earnings growth due to trade tariffs.
At 11:35 a.m. EDT the Dow Jones Industrial Average was down 159.29 points, or 0.64 percent, at 24,760.37, the S&P 500 was down 15.20 points, or 0.54 percent, at 2,778.64 and the Nasdaq Composite was down 43.01 points, or 0.55 percent, at 7,716.19.
However, the drop is not as steep as what was seen in late March and early April when the escalating trade rhetoric between China and the United States led to the S&P falling more than 2 percent on four occasions.
The technology sector slid 0.51 percent. Chipmakers, which largely depend on China for their revenue, weighed the most, with the Philadelphia semiconductor index falling 2.35 percent.
The materials and energy sectors also fell more than 1 percent, while the defensive utilities sector was the only one in the positive territory, with a 0.85 percent gain.
Twenty-First Century Fox fell 3.7 percent after the media company raised its offer for Britain’s Sky, seeing off rival bidder Comcast for now. Comcast shares were up 2 percent.
Fastenal’s shares rose 12.6 percent, the most on the S&P, after the industrial products distributor’s Q2 revenue and profit topped estimates.
The next biggest gainer was TripAdvisor, which rose 2 percent on a Barclays rating upgrade.
Declining issues outnumbered advancers for a 2.00-to-1 ratio on the NYSE and a 1.69-to-1 ratio on the Nasdaq.
The S&P index recorded 10 new 52-week highs and one new low, while the Nasdaq recorded 47 new highs and 26 new lows.
Reporting by Amy Caren Daniel in Bengaluru; Editing by Anil D'Silva
