A slide in technology companies helped pull US stocks lower on Monday, ending a five-day winning streak for the market.
The sell-off came amid speculation that the Trump administration was preparing to impose tariffs on another 200 billion dollars of Chinese goods.
The two governments have already imposed 25% tariffs on 50 billion dollars of each other’s goods, and another round of tariffs would represent a significant escalation in the trade dispute between the world’s two largest economies.
Investors used the prospect of a deeper trade conflict to take some profits, especially in technology stocks, the market’s biggest gainers this year.
Department stores and other consumer-focused companies also accounted for a big slice of the losses.
Safe-play sectors like real estate and utilities rose. Oil prices fell, erasing early gains.
The S&P 500 index fell 16.18 points, or 0.6%, to 2,888.80, and the Dow Jones Industrial Average lost 92.55 points, or 0.4%, to 26,062.12.
The tech-heavy Nasdaq composite gave up 114.25 points, or 1.4%, to 7,895.79, and the Russell 2000 index of smaller companies fell 18.17 points, or 1.1%, to 1,703.55.
Most stocks closed lower on the New York Stock Exchange.
The US has been locked in an escalating trade dispute with China, its biggest trading partner.
Washington claims Beijing uses predatory tactics to acquire technology know-how in an effort to overtake America’s global supremacy in technology.
Over the weekend, reports indicated the White House was set to announce tariffs on 200 billion dollars more in Chinese imports as soon as Monday. Beijing has said it would swiftly retaliate.
The uncertainty over the trade dispute has at times rocked the market, but not derailed it from notching gains on the strength of strong corporate earnings and a growing US economy. That suggests many investors, for now, expect both sides will ultimately work out a deal.
“It’s a short-term, immediate-term thorn in the market’s side,” said Ted Theodore, chief investment officer of TrimTabs Asset Management. “A big part of it is not knowing what the game plan is.”
Technology companies led the market’s slide. Apple lost 2.7% to 217.88 dollars, while Netflix slumped 3.9% to 350.35 dollars. Twitter fell 4.2% to 28.86 dollars after an analyst cut the price target on the social media company.
Amazon.com lost 3.2% to 1,908.03 dollars after The Wall Street Journal reported that the online retail giant is investigating suspected bribes and data leaks of its employees.
Several big department store chains declined. Macy’s slid 3.1% to 35.16 dollars, Kohl’s lost 2% to 79.26 dollars, and Gap gave up 2.6% to 27.05 dollars.
Traders bid up shares in companies that got favourable news from government regulators.
Teva Pharmaceutical climbed 2.5% to 23.43 dollars after the Food and Drug Administration approved the drugmaker’s preventative migraine treatment.
Express Scripts jumped 3.7% to 95.23 dollars after regulators cleared the way for Cigna to buy it. Cigna rose 1.4% to 197.84 dollars.
Bond prices were little changed. The yield on the 10-year Treasury held at 2.99%.
The dollar fell to 111.18 yen from 112.03 on Friday, and the euro strengthened to 1.1686 dollars from 1.1632.
Oil prices declined, wiping out gains from earlier in the day. Benchmark US crude lost 0.1% to settle at 68.91 dollars a barrel in New York. Brent crude, used to price international oils, fell 0.1% to close at 78.05 dollars a barrel in London.
In other energy trading, wholesale gasoline slipped 0.3% to 1.98 dollars a gallon, heating oil fell 0.1% to 2.21 dollars a gallon, and natural gas jumped 1.7% to 2.81 dollars per 1,000 cubic feet.
Gold rose 0.4% to 1,205.80 dollars an ounce, silver added 0.6% to 14.22 dollars an ounce, and copper gained 0.2% to 2.65 dollars a pound.