US stocks end sharply lower on tech, trade worries; Nasdaq drops 2.7 %
New York: Wall Street stocks plunged as stumbles by high-flying technology shares sparked a broader selloff on Monday amid rising fears of a trade war.
The tech-rich Nasdaq Composite Index led the market lower, dropping 2.7 per cent to 6,870.12.
The Dow Jones Industrial Average dropped 1.9 per cent at 23,644.19, while the broad-based S&P 500 shed 2.2 per cent to 2,581.88. The ugliest losses were experienced by tech giants such as Amazon, Facebook and Tesla Motors, each following specific catalysts that spurred selling. But in a worrisome development, the liquidation spread to a broader slate of companies, including American Express, Home Depot, Nike and Dow DuPont, all of which lost two per cent or more.
"It started with the tech stocks and it's become 'throw the baby out with the bathwater,'" said J J Kinahan, chief market strategist at TD Ameritrade.
"They're reassessing the valuation on the entire market," said Kinahan. "A while ago all news was good news. Now news is all things to be afraid of."
The losses translated into a bruising first day of trading for the second quarter and another sign of how profoundly market sentiment has shifted in 2018.
After US stocks surged to repeat records in January on euphoria over President Donald Trump's tax cut, Wall Street has been buffeted by a series of worries over the prospect of higher inflation spurring the Federal Reserve to accelerate interest rate hikes and the risk that Trump's harsh trade policies could ignite a global trade war. Trade anxieties were back in focus again Monday after China slapped tariffs on 128 US exports, including 25 per cent on pork products and recycled aluminum.
In addition to that move, which Beijing had telegraphed in retaliation for US tariffs targeting China, Trump again threatened to spike the North American Free Trade Agreement. He said on Twitter that Mexico was doing too little to counter illegal immigration into the United States.
The tech slump has further dented sentiment by clouding the long-term prospects of some of the market's biggest stars, many of which were under heavy selling pressure on Monday. Amazon sank 5.2 per cent after a series of attacks by Trump in recent days in which the US president accused the retailer of profiteering at the expense of the US Postal Service. Trump also has lambasted The Washington Post, which is owned by Amazon chief Jeff Bezos and has aggressively covered Trump scandals.
Tesla dropped 5.1 per cent amid skepticism that the company would again meet closely-watched electric car production targets. Tesla chief executive Elon Musk had joked on Twitter about Tesla's "bankruptcy" for April Fool's Day, but the stocks swoon suggested the quip fell flat. Tesla is also under scrutiny over its "Autopilot" feature, which was engaged during a fatal car crash last month in California.
The negative stories surrounding Amazon and Tesla added to the drag from Facebook, which has been reeling following revelations last month that data firm Cambridge Analytica had harvested data from 50 million customers to try to manipulate US voters in the 2016 election.