Wall Street opened with a thud on Wednesday, with stocks slumping deep in the red as investors rushed to reduce their exposure to stocks that could be hit by the escalating trade battle between the US and China.
The S&P 500 was down 1.4 per cent at 2,577.93 within minutes of the opening bell. The Dow Jones Industrial Average fell 2 per cent to 23,565.25 while the Nasdaq Composite was off 1.4 per cent at 6,845.09
The lurch lower comes after China threatened to impose tariffs on 106 US products - including soyabeans, aircrafts, automobiles and chemicals. The move came in response to the Trump administration’sar plans to slap tariffs on some $50bn in Chinese imports.
Industrials bore the brunt of the sell-off, with the materials and industrial sectors the worst perfomers on the S&P 500 after dropping more than 1.7 per cent. Within this, Boeing fell 3.9 per cent while chemical and plastic maker DowDuPont shed 2.4 per cent. Detroit’s two big carmakers Ford Motor and General Motors both lost 1 per cent.
Tractor maker Deere & Co. tumbled 3.9 per cent amid concerns that China’s tariffs on US soyabean imports could hurt the income of US farmers - Deere’s core customers.
“The latest Chinese reciprocal tariffs suggest that China has entered a stage of scaling up retaliation threats, which could either: 1) bring both sides back to a cooperation stage through negotiation; or 2) lead to a lose-lose trade war,” wrote analysts at Barclays.