Stocks on Wall Street closed broadly lower Thursday, extending the market’s slide into a fourth straight day, as investors braced for a possible escalation in the U.S.-China trade war.
Tensions between the world’s two largest economies dragged down stocks, hours before a deadline when the United States said it would impose more tariffs on Chinese goods. The worries about trade this week have halted U.S. stocks’ hottest start to a year in decades. The Standard & Poor’s 500 index is on pace for its worst week of 2019.
Thursday’s sell-off began steep and widespread, but lost momentum by afternoon, allowing the market to stem some of its losses.
Still, analysts said the market was likely in for more pain until the uncertainty over the costly trade dispute is resolved.
“China and trade remain the biggest drag and the biggest overhang for the market,” said Ben Phillips, chief investment officer at EventShares. “If there’s not a deal within the next four to six weeks, the market is going to continue to be under pressure and sell off.”
The S&P 500 ended the day down 8.70 points, or 0.3%, at 2,870.72. The benchmark index has essentially given back all its April gains, though it’s still up 14.5% for the year.
The Dow Jones industrial average fell 138.97 points, or 0.5%, to 25,828.36. It was down nearly 450 points in morning trading before regaining much of the ground it lost.
The Nasdaq composite fell 32.73 points, or 0.4%, to 7,910.59. The Russell 2000 index of smaller-company stocks fell 4.92 points, or 0.3%, to 1,570.06.
Bond prices didn’t move much. The yield on the 10-year Treasury note held steady at 2.45%.
The U.S. government has filed plans to raise tariffs on $200 billion worth of Chinese imports to 25% from 10%. The Trump administration has also threatened to extend 25% tariffs to an additional $325 billion in Chinese imports, covering everything China ships to the United States.
If the increases take effect as planned, Beijing will impose “necessary countermeasures,” China’s Commerce Ministry said. It gave no details, but a ministry spokesman said Beijing has made “all necessary preparations,” suggesting it might be bracing for a worsening conflict.
Such moves would mark a sharp escalation in the trade dispute that has raised prices on goods for consumers and companies.
Technology stocks were among the big decliners, as many companies in the sector get much of their revenue from China. The sector slid 0.7%.
Raw-materials producers also took heavy losses. The real estate sector, which investors see as a safe play, eked out a slight gain.
Occidental Petroleum tumbled 6.4% after Chevron pulled out of a potential bidding war with the company to buy Anadarko Petroleum. Energy companies also fell with the price of oil, as benchmark U.S. crude declined 0.7% to $61.70 a barrel. Brent crude, the international standard, closed essentially flat at $70.39 a barrel.
CenturyLink skidded 5% after the communications provider reported weaker quarterly revenue than analysts expected.
Tapestry, which makes Kate Spade and Coach handbags, vaulted 8.5% — the biggest gainer in the S&P 500 — after it beat first-quarter profit forecasts and announced a $1-billion stock buyback plan.
Roku leaped 28.1% after the video streaming company posted a quarterly loss that was narrower than Wall Street expected and revenue that also beat forecasts.
The U.S.-China trade war is nothing new. The nations have already raised tariffs on tens of billions of dollars’ worth of each other’s goods in their dispute over U.S. complaints about Beijing’s industrial and technology policies and a perennial U.S. deficit in trade with China.
But this year, investors were growing increasingly confident that the two sides would eventually reach a deal on trade. That helped calm markets after a tumultuous end to 2018, and the S&P 500 climbed to record highs.
A more patient Federal Reserve, which said it may not raise interest rates at all this year, also helped to clear worries about a possible recession, and the S&P 500 leaped 17.5% in the first four months of the year.
But the calm shattered this week after the United States said it would raise tariffs Friday.
“We need to be prepared for continuing uncertainty in the trade war,” said Kristina Hooper, chief global market strategist at Invesco.
Investors prematurely priced a resolution into the markets, and now it’s likely the additional tariffs will be applied, she said. She said investors still want to believe that a positive resolution is possible and said any progress in the negotiations now could “create something of a rally or certainly help stabilize stocks.”
In other commodities trading Thursday, wholesale gasoline ended little changed at $1.98 a gallon. Heating oil fell 0.6% to $2.04 a gallon. Natural gas fell 0.6% to $2.60 per 1,000 cubic feet.
Gold rose 0.3% to $1,285.20 an ounce. Silver slid 0.6% to $14.77 an ounce. Copper slipped 0.1% to $2.77 a pound.