The Dow Jones Industrial Average plunged more than 600 points Monday as investors sought shelter from an escalating trade war between the U.S. and China.
The selling was widespread and heavy, handing the benchmark S&P 500 index its biggest loss since January. The sell-off extended the market’s slide into a second week. The losses so far in May have now erased the market’s gains from April.
Technology companies, which do a lot of business with China, led the way lower. Chipmakers were among the biggest decliners. Apple also took heavy losses, tumbling 5.8 percent. Farming equipment maker Deere drove losses in the industrial sector.
The world’s two largest economies had seemed to be on track to resolve the ongoing trade dispute that has raised prices for consumers and pinched corporate profit margins. Hopes for a resolution had helped push the market to its best yearly start in decades.
Those hopes are now replaced by concerns that a full-blown trade war could crimp what is otherwise a mostly healthy economy.
The Dow dove 617.38 points, or 2.4 percent, to 25,324.99. Earlier, it was down 719 points. Apple and Boeing were the Dow’s biggest decliners. Both companies get a significant amount of revenue from China and stand to lose heavily if the trade war drags on. Boeing slid 4.9 percent.
The broader S&P 500 index fell 69.53 points, or 2.4 percent, to 2,811.87. The index is coming off its worst week since January, though it’s still up sharply for the year. The Nasdaq, which is heavily weighted with technology stocks, slid 269.92 points, or 3.4 percent, to 7,647.02, its worst drop of the year.
The Russell 2000 index of small company stocks lost 49.99 points, or 3.2 percent, to 1,523.
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 percent from 10 percent. Officials also said they were preparing to expand tariffs to cover another $300 billion of goods.
China on Monday announced tariff increases on $60 billion of U.S. imports, particularly farm products like soybeans. The price of soybeans slid 0.8 percent to $8.04 a bushel. They were trading around $9 a bushel last month and are now at their lowest price since December 2008. The falling price has put pressure on U.S. farmers.
Analysts have said investors should prepare for a more volatile stock market while the trade dispute deepens. Many are still confident that both sides will eventually reach a deal.
Technology stocks took the heaviest losses Monday. Chipmakers Microchip Technology dropped 6.3 percent and Advanced Micro Devices lost 6.2 percent.