Stocks tumble on trade fears; S&P has worst week in 2 years
NEW YORK (AP) — Stocks around the world plunged today as investors feared a trade conflict between the U.S. and China, the biggest economies in the world, would escalate.
A second day of big losses pushed U.S. stocks to their worst week in two years.
Investors fear if China responds in kind to sanctions on $60 billion worth of Chinese imports the White House announced on Thursday, it will be a first step toward a full-blown trade war that could damage the global economy and slash profits at big U.S. exporters like Apple and Boeing.
The market's two biggest sectors slumped the most. Technology stocks have made enormous gains over the past year, but since they do so much business outside the U.S., investors see them as particularly vulnerable in a trade dispute. The sector dropped 7.9 percent this week.
Banks also fell sharply. Amid the trade-war rumblings, investors fled to the safety of bonds and drove down yields, a potential negative for bank profits. That marked a reversal from earlier in the week, when banks rose as the Federal Reserve raised interest rates.
It wound up being the worst week for U.S. indexes since January 2016. The S&P 500 index sank 6 percent. Among notable decliners was Facebook, which lost 13.9 percent, or $68 billion in value, as outrage mounted over its handling of user data. That's about as much as the company was worth in in 2012, the year of its initial public offering.
Stocks sagged at the start of this month after tariffs on aluminum and steel were announced, but they quickly recovered as the administration said the tariffs wouldn't be as severe as they first looked. The losses this week were worse, and investors are hoping for hints the sanctions on China are more of a negotiating tactic.
"There could be a possibility of a bounce back if, as this progresses, both sides look like they're negotiating," said Lisa Erickson, chief investment officer at U.S. Bank Wealth Management. "There could be further decline if people get a sense there could be more trade restrictions in place."