Trump tariffs, trade-war fears sink stocks
Makers of household goods take bigger hit as EU action feared
American steel makers mostly rose, while industrial companies fell as they face the prospect of paying more for metals they use to make aircraft and machinery. Companies that make household items took some of the worst losses, as products including orange juice and peanut butter might be hit with European tariffs.
Mexico is planning duties on U.S. exports including steel, pork products and sausages, while Canada said it will put reciprocal tariffs on steel and aluminum. The European Union said it will dispute the U.S. tariffs with the World Trade Organization, which could take years.
Meanwhile, the parties will likely keep negotiating, and contentious talks between the U.S. and China are continuing as well. And while experts say a trade war remains a remote possibility, all of those disputes have been weighing on the market for months.
David Kelly of JPMorgan Funds said the dragged-out process is discouraging businesses from investing because they don’t want to build a product only to see it targeted by tariffs.
“You can do great harm to an economy just by leaving people up in the air about what the final deal is going to be,” said Kelly, the chief global strategist of JPMorgan Funds. He said the uncertainty is undoing some of the effects of the recent corporate tax cut.
The S&P 500 index lost 18.74 points, or 0.7 percent, to 2,705.27. The Dow Jones industrial average fell 251.94 points, or 1 percent, to 24,415.84.
The Nasdaq composite dipped 20.34 points, or 0.3 percent, to 7,442.12 as technology companies such as Alphabet and Facebook bucked the market’s decline. The Russell 2000 index, which is made up of smaller companies that tend to do more business in the U.S., slipped 14.32 points, or 0.9 percent, to 1,633.67. It closed at a record high Wednesday.
The U.S. tariffs go into effect Friday. The Trump administration had announced them earlier but delayed their implementation to allow for talks with the EU. U.S. Steel jumped 1.7 percent to $36.87 and Century Aluminum gained 3.4 percent to $17.72. They made larger gains earlier in the day but slipped after Canada announced reciprocal tariffs on steel and aluminum from the U.S. starting July 1.
Boeing dropped 1.7 percent to $352.16 and Caterpillar fell 2.3 percent to $151.91 while farm equipment maker Deere fell 3.6 percent to $149.51. The tariffs could increase the cost of the metals they use to make their products, and tariffs in Europe or other markets could hurt their sales.
Mexico said it would penalize U.S. imports including flat steel, cheese, fruits, pork bellies and sausage. Dairy maker Dean Foods fell 4.3 percent to $9.57 and Tyson Foods, which makes products including Jimmy Dean sausages, lost 3.9 percent to $67.47.
GM said SoftBank is taking a 20 percent stake in the GM Cruise automated division. General Motors stock jumped 12.9 percent to $42.70. That was its biggest gain since GM went public again in 2010 after emerging from bankruptcy.
Deutsche Bank slumped after the Wall Street Journal reported that the Federal Reserve determined the bank’s U.S. business is in “troubled condition.” The stock lost 4.2 percent to $11.08.
U.S. crude oil slipped 1.7 percent to $67.04 a barrel in New York. Brent crude, used to price international oils, added 0.1 percent to $77.59 per barrel in London.
Bond prices edged higher. The yield on the 10-year Treasury note fell to 2.83 percent from 2.85 percent and financial companies fell.
Gold lost 0.1 percent to $1,300.10 an ounce.