NEW YORK: Wall Street’s main indexes fell on Tuesday, with the tech-heavy Nasdaq on course to confirm a correction, as investors feared that an escalating trade war between the US and its partners could damage the country’s economy.
The Nasdaq Composite index was on track to fall into correction territory, having fallen 10% from its record closing high on December 16.
Financials weighed on all the three indexes and those on the S&P 500 led sectoral declines with a 3.6% drop.
Wall Street’s biggest banks such as Citigroup and JPMorgan Chase & Co fell 7.4% and 4.8%, respectively, sending the bigger banks index down 5.5%.
The CBOE market volatility index added 1.99 points to touch a two-month high.
The latest trigger for equities came after the United States’ tariffs on imports from Mexico and Canada, along with its doubled duties on Chinese goods that took effect on Tuesday.
Following this, Beijing responded with additional tariffs on US imports and Canada announced 25% tariffs on US imports with immediate effect.
A standoff between the countries could upend nearly $2.2 trillion in two-way annual trade.
“The fear here is that it’s going to slow (economic) growth,” said Adam Sarhan, chief executive of 50 Park Investments in New York.
“And when you have a slowdown in economic conditions, it’s a situation where banks specifically make less money because fewer goods and services are traveling through the economy.”
At 11:47 a.m. ET, the Dow Jones Industrial Average fell 698.44 points, or 1.62%, to 42,492.80, the S&P 500 lost 88.03 points, or 1.50%, to 5,761.69 and the Nasdaq Composite lost 210.73 points, or 1.15%, to 18,139.46.
Ford and General Motors, that have vast supply chains across north America, fell 3% and 3.6%, respectively, while housing stocks touched a one-year low.
Nasdaq components such as Nvidia and Meta fell, while Tesla dropped 5.8% after weak monthly China sales data.
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