Dow tumbles more than 500 points as tariff talk sparks worry of trade war

U.S. equity indexes sank Thursday afternoon, pitching sharply lower amid an announcement that President Donald Trump would impose tariffs on steel and aluminum imports, raising concerns of protectionists trade policies that could hit U.S. corporations and consumers.

The tariff news also come as the market was following a second round of testimony from Federal Reserve Chairman Jerome Powell, which concluded at around noon.

See: Powells second day of testimony on Fed policy: Live blog and video

What are the main benchmarks doing?

The Dow Jones Industrial Average DJIA, -1.98% tumbled 449 points, or 1.8%, at 24,576, with blue chips down by as much as 590 points at the lows of the session, down about 2.3%.

The S&P 500 SPX, -1.64% gave up 45 points, or 1.7%, to 2,667, led by selling in the technology and health-care sectors, which were both down by at least 2%. All 11 sectors were trading in the red, underscoring downdraft that was broad based.

The Nasdaq Composite Index COMP, -1.67% meanwhile, declined 125 points, or 1.7%, at 7,149.

All three benchmarks were looking to kick off March trade with their worst daily decline in about three weeks.

The Dow gave up 4.3% in February, notching its biggest monthly drop in more than two years and paring its advance over the past 12 months to 20%.

What are driving markets?

Trump told steel and aluminum executives gathered at the White House on Thursday that the U.S. would announce tariffs on imports of those products next week. Trump said the U.S. would set tariffs of 25% for steel and 10% for aluminum. Trump met with executives at companies including U.S. Steel Corp. X, +4.83% Nucor Corp. NUE, +2.63% and Century Aluminum Co. CENX, +5.92%

Stronger-than-expected economic releases earlier lent support to markets, with the Institute for Supply Managements manufacturing index hitting a 13-year high, had initially helped push the market higher that open, before the benchmarks relinquished its gains.

What are strategists saying?

Maybe youre doing a service for few steel and aluminum companies but you are crushing the rest of the market because people know that this is not what people want to see and its going to be a big problem because this ripples through the market and if you are [General Motors[ you could be suddenly paying more for aluminum or steel, he added.

Either your margins are going to be hit or youre raising prices, Winer said. Winer said that the talk of tariffs might elicit a reaction from China or other nations that could hurt U.S. corporations.

I think its a combination of the uncertainties that are becoming a little bit more apparent, said Maris Ogg, president at Tower Bridge Advisors.

January and part of February we were in the euphoria phase and I think people are realizing that we are wrestling with the uncertainty of Powell and the market never likes uncertainty, Ogg said. She added that the selloff in the market might be driving down stocks to multiples that are more attractive.

Opinion: Powells first faux pas came quick

And see: 4 financial-market takeaways from Powells debut

What data are in focus?

A strong economy and tight labor market has contributed to higher inflation, with the personal-consumption expenditure inflation index up 0.4% in January. The yearly increase in the PCE was flat at 1.7% for the third month in a row, below the Feds 2% target.

Initial U.S. jobless claims fell by 10,000 to 210,000 in the seven days ended Feb. 24, the lowest level in nearly 50 years.

The Institute for Supply Management said its manufacturing index rose to 60.8% in February, up from 59.1% in January, to reach the highest level since May 2004.

A January report on construction spending was unchanged.

Check out: MarketWatchs Economic Calendar

Which stocks look like key movers?

Shares in L Brands Inc. LB, -12.33% tumbled 12% after the Victorias Secret parent late Wednesday gave a quarterly outlook that appeared to disappoint Wall Street. Inc.s stock CRM, +2.26% rose 2.1% after the software companys quarterly results beat expectations.

Best Buy Co. BBY, +3.23% earnings and revenue came in above expectations, sending shares 3.4% higher.

Kohls Corp. KSS, -6.63% shares dropped 7.5% after disappointing quarterly earnings.

Barnes & Noble Inc. BKS, -2.22% shares slid 0.1% after it reported a fiscal third-quarter loss.

In addition, reports covering U.S. auto sales for February are scheduled to roll in throughout the day.

FCA US, the U.S. unit of Fiat Chrysler Automobiles NV FCA, +0.12% sales fell 1% in February to 168,326 vehicles. Shares fell 2%.

What are other assets doing?

European equity gauges SXXP, -1.26% settled sharply lower, while Asian markets finished mixed. Gold futures GCJ8, -0.62% and oil futures CLJ8, -1.15% lost ground, as the ICE U.S. Dollar Index DXY, -0.04% edged up.

Victor Reklaitis contributed to this article

Related Topics U.S. Stocks Markets NY Stock Exchange NASDAQ Quote References DJIA -496.39 -1.98% SPX -44.41 -1.64% COMP -121.40 -1.67% X +2.10 +4.83% NUE +1.72 +2.63% CENX +1.13 +5.92% LB -6.08 -12.33% CRM +2.63 +2.26% BBY +2.34 +3.23% KSS -4.38 -6.63% BKS -0.10 -2.22% FCA +0.04 +0.12% SXXP -4.77 -1.26% GCJ8 -8.20 -0.62% CLJ8 -0.71 -1.15% DXY -0.04 -0.04% Show all references MarketWatch Partner Center Most Popular Dow tumbles nearly 600 points at lows as tariff talk sparks worry of trade war Dow skids 550 points, testing day's lows as Trump says U.S. will institute steel, aluminum tariffs indefinitely Beware, the IRS is looking for these red flags this tax season Hedge fund boss who predicted the 1987 stock crash warns of a selloff in bonds This is what happens when homes are made permanently affordable We Want to Hear from You

Join the conversation

Comment BACK TO TOP MarketWatch Site Index Topics Help Feedback Newsroom Roster Media Archive Premium Products Mobile Company Company Info Code of Conduct Corrections Advertising Media Kit Advertise Locally Reprints & Licensing Your Ad Choices Dow Jones Network Barron’s Online BigCharts Virtual Stock Exchange Financial News London Small Business Mansion Global

Copyright © 2018 MarketWatch, Inc. All rights reserved.

By using this site you agree to the Terms of Service, Privacy Policy, and Cookie Policy.

Download from the App Store Download from the Google Play Store Intraday Data provided by SIX Financial Information and subject to terms of use. Historical and current end-of-day data provided by SIX Financial Information. All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Intraday data delayed at least 15 minutes or per exchange requirements. Advanced Search Stocks Columns Authors Topics No results found