US stocks fall 2% on trade war fears

US stocks. (Reuters pic)

NEW YORK: US stocks plunged Monday, with the Dow sinking as low as 2%, on signs the Trump administration plans new trade actions against China that could spark further retaliation.

Near 1920 GMT, the Dow Jones Industrial Average was down 1.7% at 24,154.39, after earlier losing 2%.

The broad-based S&P 500 shed 1.8% to 2,705.47, while the tech-rich Nasdaq Composite Index tumbled 2.6% to 7,496.81.

Citing national security concerns, Trump in late May announced plans to impose steep tariffs on Chinese goods, and then by June 30 to unveil “specific investment restrictions and enhanced export controls” tied to “industrially significant technology” that will apply to Chinese companies and investors.

According The Wall Street Journal, the measures likely would target investments in the United States by any firm that is 25% Chinese held, although that threshold could drop if the investment is considered sensitive.

Treasury Secretary Steven Mnuchin vehemently denied the Journal report, calling it “false, fake news.”

Stocks have been in the red the entire session, with losses deepening somewhat as the session has progressed.

Dow companies with deep losses included Boeing and Caterpillar, both of which were down about 3%. The two companies have been seen as especially vulnerable to trade war fears.

But the weakness also spread to the Nasdaq, which has outperformed industrials in recent weeks on expectations that tech companies would be more insulated from a trade war.

However, the Nasdaq was off more than the other two indices on Monday, suggesting investors may be rethinking that assessment.