Investing.com - Wall Street traded sharply lower on Thursday with the S&P 500 and Nasdaq racking up a fourth day of declines, as hopes that the U.S. and China could avoid escalating their trade dispute evaporated.
U.S. President Donald Trump claimed that Beijing “broke the deal” and stood firm on plans to raise tariffs on hundreds of billions of dollars in Chinese imports, while China said escalation was not going to help either side but promised to retaliate.
As top trade officials from both countries meet for two days in Washington little hope of a renewed truce was evident despite calls from China for the U.S. to meet it halfway.
Investors scrambled to take risk off the table amid worries that a full-blown trade war between the world’s two largest companies would damage the global economy and corporate profits.
The Dow Jones sank 238 points, or 0.9%, to 25,729.28 points by 9:42 AM ET (13:42 GMT), while the S&P 500 lost 28 points, or 1.0%, 2,851.38 points and the tech-heavy NASDAQ Composite traded down 95 points, or 1.2%, 7,848.61 points.
The S&P 500 has undergone four straight sessions of losses and is currently down 3.4% from its all-time high of 2,954.13 points, reached on May 1.
Dow heavyweight Boeing (NYSE:BA) hit a four-month low in early trading while Caterpillar (NYSE:CAT), which like Boeing is sensitive to Chinese demand and to tariffs, hit its lowest since mid-February.
Intel (NASDAQ:INTC) fell by 5.3%, Nvidia Corporation (NASDAQ:NVDA) by 4.5% and Micron Technology (NASDAQ:MU) by 3.3%, after China said it intended to extend preferential taxes for some domestic chipmakers. The three companies had stood to gain from improved access to the Chinese market under the mooted agreement.
Not all the corporate news was bad. Chevron (NYSE:CVX) surged nearly 3%, leading advancers on the Dow, after it dropped its bid for Anadarko Petroleum (NYSE:APC), avoiding a bidding war with Occidental Petroleum (NYSE:OXY). Chevron will get a $1 billion break fee from Anadarko under the terms of its original offer.
Walt Disney (NYSE:DIS) also saw shares edge forward thanks to a better-than-expected earnings report.
Nearly lost in the headlines, producer prices rose in April, but the annualized reading unexpectedly held steady at 2.2%. Muted inflation has been key to stopping any further interest rate hikes from the Federal Reserve this year. In other news, weekly jobless claims fell less than expected, but had little market impact.
After the data, the U.S. dollar index, which measures the greenback against six developed-market currencies, was little changed at 97.35 by 9:45 AM ET (13:45 GMT), while the yield on the 10-year Treasury was at 2.44%, unchanged from before the news but down 4 basis points from late Wednesday.
In commodities, gold futures edged forward $2.55, or 0.2%, to $1,283.95 a troy ounce, while crude oil was down 74 cents, or 1.2% at $61.38 a barrel.