Stocks slumped on Friday after China announced retaliatory tariffs on $75 billion of U.S. goods, setting off President Donald Trump on a Twitter rant.
Mr. Trump first seemed to invite the Federal Reserve to respond to China, then ordered U.S. companies to “start looking for an alternative to China,” including making more products in the U.S.
The Dow dropped more than 502 points, or 2%, as of noon Eastern time. The S&P 500 also fell 2.1%, and the tech-heavy Nasdaq dropped 2.6%.
Technology companies, which have much to lose in the trade battle with China, fell the most. Apple lost 4.6%. Chipmaker Nvidia lost 2.2%. American automakers threatened by an increase in levies from 15% to 25% in the newest round of tariffs also saw their share price drop.
Hasbro dropped 5.9% after the toymaker announced a deal to buy the parent company of Peppa Pig for $4 billion.
By contrast, bond prices rose sharply. The yield on the 10-year Treasury dropped to 1.51% from 1.61%.
China on Friday said the tariffs of 5% to 10% on two batches of U.S. goods starting Sept. 1 and Dec. 15 are in response to Mr. Trump’s decision earlier this month to levy new tariffs. The U.S. president previously said he will impose 10% duties starting Sept. 1 on the remaining $300 billion of U.S. imports from China, with some duties for popular consumer goods pushed back to Dec. 15 for the holiday season.
Mr. Trump responded furiously Friday to China’s tariffs in a series of tweets, heightening trade tensions between the world’s largest economies that Wall Street investors worry will tip the globe into a recession.
“Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA,” Mr. Trump tweeted. “I will be responding to China’s Tariffs this afternoon.”
Mr. Trump also said he was ordering UPS, Federal Express and Amazon to block any deliveries from China of the powerful opioid drug fentanyl. UPS and FedEx each fell 2.8%.
The China announcement also reversed gains after a speech from Jerome Powell in Jackson Hole, Wyoming, which indicated the Fed would stay the course on monetary policy in the coming weeks.