U.S. stocks slumped Monday as investors grew concerned that the technology sector, a pillar of the long-running bull market, could be dragged into the broadening trade dispute between the United States and China. The Dow Jones industrial average fell for the ninth time in 10 days.
Stocks sank after the Wall Street Journal and Bloomberg News reported that the Trump administration intends to limit exports of some high-tech products to China and limit investment in technology firms by companies with substantial Chinese ownership. Treasury Secretary Steven T. Mnuchin suggested the investment restrictions wouldn’t be limited to China, and the losses deepened. During the day, the Dow sank as much as 496 points.
The market recovered some of those losses after Peter Navarro, one of President Trump’s top trade advisors, told CNBC that there was no plan for investment restrictions and that the administration’s investigation into alleged technology theft is limited to China.
“We hear one thing one hour and something that contradicts it the next hour or the next day,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab. “Nobody knows what to think or what to believe. It makes it really tough to invest.”
All but one of the 72 technology companies listed on the Standard & Poor’s 500 index fell Monday. Those companies have done far better than the broader market over the last year and a half, and investors had considered them to be less vulnerable to tariffs than other sectors such as manufacturing.
Taxes by the United States on tens of billions of dollars in imports from China, and retaliatory taxes by China on U.S. goods, are set to take effect in less than two weeks. Few investors expect a full-blown trade war, but Frederick said talks appear to be going in the wrong direction.
“Every day you get closer to those particular dates, it gets more worrisome,” he said. Frederick said that is likely to lead to more market volatility.
The S&P 500 index slid 37.81 points, or 1.4%, to 2,717.07, its biggest loss since April 6. The Dow fell 328.09 points, or 1.3%, to 24,252.80. The Nasdaq composite sank 160.81 points, or 2.1%, to 7,532.01. The Russell 2000 index of smaller-company stocks declined 28.07 points, or 1.7%, to 1,657.51.
Harley-Davidson fell 6% to $41.57 after it said it would move some production overseas to avoid tariffs the European Union is placing on motorcycles made in the U.S. Those tariffs were a response to taxes the United States placed on steel and aluminum from Europe.
China is trying to become a global leader in biotechnology, electric vehicles and other industries, and the news reports said the administration wants to slow Beijing’s progress in those areas. Trump has threatened to put tariffs on hundreds of billions of dollars in Chinese imports over complaints that Beijing steals or pressures foreign companies to hand over technology. Trump also is pressuring China to buy more U.S.-made goods.
Shares of chipmaker Micron Technology, which gets half its revenue from China, sank 6.9% to $53.16. Advanced Micro Devices fell 4.4% to $15.11. Nvidia slid 4.7% to $239.12.
In overseas stock markets, Germany’s DAX fell 2.5%, and London’s FTSE 100 gave up 2.2%. France’s CAC 40 shed 1.9%. Hong Kong’s Hang Seng lost 1.3%. Tokyo’s Nikkei 225 shed 0.8%. In South Korea, the Kospi was little changed.
Retailers and other consumer-focused companies fell as investors sold some of the stocks that have done the best this year. Amazon.com retreated 3.1% to $1,663.15. Netflix dropped 6.5% to $384.48.
The S&P 500 index of technology companies and its index of consumer-focused companies are both up 10% this year. The overall S&P 500 is up 1.6%.
Bond prices rose. The yield on the 10-year Treasury note fell to 2.87% from 2.89%.
Cruise lines’ stocks dropped after Carnival cut its annual profit forecast, citing the rising cost of fuel. Carnival fell 7.9% to $58.54, and competitors Royal Caribbean and Norwegian Cruises slumped.
Investors still responded positively to deal reports. Gray Television jumped 16% to $14.85 after the broadcaster said it will combine with Raycom in a deal the companies valued at $3.6 billion. Campbell Soup rose 9.4% to $42.23 after the New York Post said Kraft Heinz is interested in buying the company. Kraft edged up 0.2% to $63.32.
Benchmark U.S. crude fell 0.7% to $68.08 a barrel in New York. It climbed 4.6% on Friday, its biggest one-day gain since late 2016. Brent crude, used to price international oils, dropped 1.1% to $74.73 a barrel in London.
OPEC countries agreed Friday to produce more oil, but investors aren’t sure the cartel will produce as much crude oil as it says it will.
Wholesale gasoline fell 0.9% to $2.05 a gallon. Heating oil fell 1.2% to $2.10 a gallon. Natural gas fell 0.7% to $2.92 per 1,000 cubic feet.
Gold edged down 0.1% to $1,268.90 an ounce. Silver fell 0.8% to $16.33 an ounce. Copper fell 1.3% to $2.99 a pound.
The dollar fell to 109.45 yen from 109.91 yen. The euro rose to $1.1704 from $1.1663.
3 p.m.: This article was updated with closing prices, context and analyst comment.
1:10 p.m.: This article was updated with the close of markets.
12:20 p.m.: This article was updated with more recent market prices and context.
This article was originally published at 9:25 a.m.