US stocks tumbled on Thursday, with focus on a high-stakes meeting between the United States and China that could decide the fate of a long-awaited trade deal, even as additional tariffs on Chinese goods loomed.
At a Wednesday rally in Florida, President Trump said China “broke the deal” in recent trade negotiations and vowed not to back down on imposing new tariffs unless Beijing “stops cheating our workers,” as two-day talks begin in Washington on Thursday.
As of 10:37 a.m., the Dow Jones industrial average was off 409.99 points, or 1.6%, at $25,557.34. The S&P 50 was off 1.3% at $2,841.66 and the Nasdaq was off 1.7% at 7,806.16.
China has threatened to retaliate if tariffs on $200 billion worth of Chinese goods increase to 25% on Friday, rekindling worries of a global economic slowdown and triggering a flight to safety among investors.
“It is a concerning feeling for investors because they don’t know what to make of these conflicting signals from trade talks,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.
“There isn’t really a lot of precedent for what Trump is doing here but the general view is that he does want an agreement. The talks aren’t dead and there is potential that they might still reach an agreement.”
The benchmark S&P 500 index fell below its 50-day moving average, a closely watched level of near-term momentum, with all the major sectors lower.
The technology sector posted the steepest declines, slipping 1.58%, dragged down by a fall in shares of iPhone maker Apple and chipmakers, which get a large portion of their revenue from China.
Trade-sensitive industrial bellwethers were also hit, with Boeing Co., Caterpillar and 3M trading down 1%.
Meanwhile, data showed the US goods trade deficit with China, a focus of the Trump administration’s “America First” agenda, dropped to a five-year low in March amid a surge in exports, including soybeans.
The CBOE Volatility Index, a gauge of investor anxiety, spiked to its highest level in four months.
In a bright spot, Tapestry Inc. jumped 11.3%, the most among S&P companies, after the Coach handbag maker beat quarterly profit estimates and announced a $1 billion share buyback program.
Chevron Corp. climbed 2.9% and was the biggest boost to the Dow, after the oil major said it would not raise its $33 billion offer to buy Anadarko Petroleum Corp.