NEW YORK (AFP) - Wall Street stocks fell sharply on Thursday (March 1) after President Donald Trump said he will enact steep tariffs on steel and aluminum imports, reviving worries of a trade war.
The Dow Jones Industrial Average tumbled 1.7 per cent to close 24,608.98, above the worst levels of the day.
The broad-based S&P 500 dropped 1.3 per cent to end at 2,677.67, while the tech-rich Nasdaq Composite Index fell 1.3 per cent to 7,180.356.
Trump, at a meeting with American steel and aluminum producers, ended rumor and counter-rumour about his administration’s intentions, an announced that “next week” he would sign off on measures designed to protect US companies.
US stocks sold off decisively following the news, with the Dow losing as much as 2.3 per cent on worries that tariffs will exacerbate inflation and prompt retaliatory moves by trading partners.
Trump’s comments on tariffs injected additional uncertainty at a time when investors already were edgy over the prospect of higher interest rates, said Briefing.com analyst Patrick O’Hare.
“Investor sentiment is shaky,” O’Hare said. “It’s not a good thing for the market to get into some kind of trade war.”
The prospect of a trade war has been a recurring worry since Trump took office vowing “America First” trade policies, countered by the administration’s market-friendly stances on regulation and taxes. Free market backers of the president have hoped his harsh rhetoric on trade would remain rhetoric and not be translated into action.
“It’s too early to anticipate a trade war between nations,” said Alan Skrainka, chief investment officer at Cornerstone Wealth Management. “The market is a little bit overreacting.”
A note from Barclays said aluminum and steel imports account for only 2 per cent of goods imported to the US, but added that “the risk to the outlook lies in the response of US trading partners and whether the administration’s decision to impose restrictive trade policies is only the first in a series of moves.”
Export-related manufacturers were among the biggest losers in the trading session, with Boeing, United Technologies and General Motors all losing more than 3 per cent.
Large technology companies also suffered, including Apple and Google-parent Alphabet, which fell about two percent or more.
But steelmakers rose, with US Steel winning 5.8 per cent and Nucor gaining 3.3 per cent. Century Aluminum advanced 7.5 per cent.
Several companies also experienced big moves after earnings reports, with Salesforce.com gaining 2.7 per cent, Best Buy rising 4 per cent and Kohl’s shedding 5.1 per cent.