Investors ran for the doors on Monday as the trade war with China intensified.
The Dow and S&P 500 had their worst days since Jan. 3, while the Nasdaq's sell-off was the steepest since Dec. 4
China fueled the market swoon with its plans to increase duties on $60 billion of U.S. goods, largely agricultural products, starting June 1. The move is a retaliatory measure against higher tariffs imposed on Chinese imports by the White House last week.
"China timed the announcement perfectly, right before the open," said John Lynch, chief investment strategist at LPL Financial. "That's no way to ease into the week."
Biggest stock market losers
The Dow tumbled 617 points, or 2.38%, to finish at 25,325 on Monday. The Standard & Poor's 500 index lost almost 70 points, or 2.41%, to end at 2,812. The sell-off decimated the tech-heavy Nasdaq the most, which plunged 270 points, or 3.41%, to 7,647.
Why trade war matters: Higher prices, lost jobs and falling stocks
Keeping up with Instagram: Young people, scrolling their friends' feeds, feel pressure to overspend
Technology stocks had some of the heaviest losses. Apple fell 5.81% to $185.72, while Cisco dropped 3.86% to $51.30 per share. Chipmakers and other technology companies have warned that uncertainty over the trade war's outcome is prompting a slowdown in orders.
Heavy equipment makers Deere and Caterpillar drove losses in the industrial sector. Deere ended 6.26% lower at $146.28 a share, while Caterpillar ended 4.6% lower at $125.30. Boeing lost 4.88% to $337.37 a share.
Boeing and Caterpillar both get a significant amount of revenue from China and stand to lose heavily if the trade war drags on.
Trading tariff barbs
The heavy declines come after more than a week of escalating tensions between the two nations. President Donald Trump sparked the conflict last Sunday with a pair of tweets threatening higher tariffs that the administration enacted on Friday.
The moves surprised investors who thought the world’s largest economies were on track to resolve the ongoing trade dispute that has raised prices for consumers and pinched corporate profit margins. Investor confidence that the two sides were close to a resolution had helped push the market to its best yearly start in decades.
Those hopes are now being dashed and replaced by concerns that the trade war could crimp what is otherwise a mostly healthy economy. Analysts have warned that failed trade talks and the deterioration in relations will put a dent in the U.S. and China’s economic prospects.
Trade talks between the U.S. and China concluded Friday with no agreement and with the U.S. increasing import tariffs on $200 billion of Chinese goods to 25% from 10%. Officials also said they were preparing to expand tariffs to cover another $300 billion of goods.
"The larger issue with the tariffs isn't the specific amounts of tariffs at any given time, but the uncertainty that's surrounding these tariffs and the 'what's-next?' of an escalating trade war," said Willie Delwiche, investment strategist at Baird. "That weighs on the global economy and could then weigh on the U.S. economy."
Contributing: The Associated Press
This article originally appeared on USA TODAY: Dow plunges 600 points, the worst day since January, as China retaliates in trade war