Stocks fell sharply on Wall Street on Monday, knocking nearly 400 points off the Dow Jones Industrial Average.
The benchmark S&P 500 had its worst day in a week as the selling put the market deeper into the red for August. It was widespread, with technology companies and banks accounting for a big share of the decline.
Investors sought safety in U.S. government bonds, sending their yields tumbling. The price for gold, another traditional haven, closed higher.
The costly trade war between the U.S. and China has rattled markets this month. An escalation in tensions between the world’s largest economies has stoked worries that the long-running trade conflict will undercut an already slowing global economy.
“Trade and the concern that as this escalates it continues to wear on confidence to a point that this actually causes a recession, that’s what people are wrestling with,” said Ben Phillips, chief investment officer at EventShares.
The latest wave of anxious selling left the S&P 500 index down 35.95 points, or 1.2%, at 2,882.70. The Dow fell 391 points, or 1.5%, to 25,896.44. The average was briefly down 462 points.
The Nasdaq composite dropped 95.73, or 1.2%, to 7,863.41. The Russell 2000 index of smaller-company stocks lost 18.58 points, or 1.2%, to 1,494.46.
The major indexes are down more than 3% for August. Even after this month’s stumble, they are up solidly this year, led by the Nasdaq with a gain of 18.5%. The S&P 500 is up nearly 15%, though it’s down 4.7% from its high set at the end of July.
Anxiety and fear over the U.S.-Chinese trade war continues to hover over the market and has taken stocks on a wild ride in August.
The S&P 500 index zoomed up and down last week, ending with its second straight weekly loss. The wild swings follow President Donald Trump’s threat to impose more tariffs on Chinese goods, followed by China’s move to allow its currency to weaken.
Trump has promised 10% tariffs on $300 billion in Chinese imports that haven’t already been hit with tariffs of 25%. The new tariff would go into effect Sept. 1 and more directly affect U.S. consumers.
Last week, Trump said he’d be fine if the U.S. and China don’t go ahead with a meeting next month, dampening investors’ hopes for a path to resolving the economically damaging trade war.
The longer the trade conflict drags on, the more it has the potential to threaten the weakening global economy by discouraging trade and causing businesses to put capital spending plans on hold. The International Monetary Fund expects world trade to slow in 2019 for a second straight year.
“We’re hearing from management teams that there’s just caution on investing, especially globally,” Phillips said. “Multinationals are being very cautious. ... Their view is if the rest of the world slows down, the U.S. won’t be insulated from that.”
Traders continued to shift money into bonds Monday, sending bond prices sharply higher. That pulled down the yield on the 10-year Treasury to 1.64% from 1.73% late Friday, a big move. The yield is used as a benchmark for interest rates on mortgages and other consumer loans.