Stocks Drop After More Threats

NEW YORK (AP) -- Global stock markets fell Tuesday after President Donald Trump threatened to put tariffs on another $200 billion in imports from China, and the Chinese government said it would retaliate.

The Dow Jones industrial average lost 370 points, or 1.5 percent. The Hang Seng index in Hong Kong lost 2.8 percent. Major stock indexes in Asia and Europe also took sharp losses. Trump's new proposal calls for a 10 percent tariff on $200 billion in goods, and Beijing said it would respond with "comprehensive measures." It doesn't import enough goods from the U.S. to match the scale of Trump's proposal but could adopt other methods.

Last week Trump ordered a 25 percent tax on $34 billion in Chinese imports and Beijing matched that total. Those tariffs won't take effect until July 6, which leaves more time to negotiate for the world's two largest economies.

The Dow traded as 24,617 as of 10:00 a.m. Eastern time. The S&P 500 index gave up 26 points, or 1 percent, to 2,746. The Nasdaq composite fell 89 points, or 0.8 percent, to 7,658.

Industrial and technology companies took some of the worst losses as investors worried that the dispute could grow more intense and drag down global economic growth. Trump accused Beijing of being unwilling to resolve the dispute over complaints it steals or pressures foreign companies to hand over technology. China's Commerce Ministry criticized the White House action as blackmail and said Beijing was ready to retaliate.

Aerospace company Boeing dropped 3 percent to $344.07 and construction and mining equipment maker Caterpillar shed 2.7 percent to $144.60. Apple fell 1.5 percent to $185.93 and Facebook gave up 0.9 percent to $196.55.

Bond prices climbed as investors turned a bit more cautious. The yield on the 10-year Treasury note fell to 2.89 percent from 2.92 percent. That sent interest rates lower and banks skidded as well. JPMorgan Chase surrendered 1.2 percent to $106.84 and Bank of America slid 1.3 percent to $29.01.

Oil prices turned lower, with U.S. crude down the most. It fell 1.4 percent to $64.96 a barrel in New York, and Brent crude, the international standard for oil prices, fell 0.5 percent ot$74.99 a barrel in London. That affected energy companies. Chevron lost 1.2 percent to $124.44 and Schlumberger dipped 2.3 percent to $65.52.

Steel companies also took sharp losses. U.S. Steel fell 3.5 percent to $43.87 and Nucor lost 2.9 percent to $64.84 while aluminum producer Alcoa declined 3 percent to $44.40.

Germany's DAX was down 1.4 percent after a similar loss Monday. The CAC 40 of France fell 1.2 percent and in London the FTSE 100 lost 0.5 percent.

The losses were even heavier in Asia, where Tokyo's Nikkei 225 retreated 1.8 percent and Seoul's Kospi gave up 1.5 percent. Indexes in Australia and India took smaller losses.

With bond yields falling, some investors bought high-dividend companies like utilities and real estate investment trusts. NextEra Energy rose 0.9 percent to $161.71 and Welltower gained 0.9 percent to $57.54.

Smaller U.S. companies with a domestic focus continued to do better than multinationals, and the Russell 2000 index lost 8 points, or 0.5 percent, to 1,683. The Russell is up almost 10 percent this year while the S&P has risen 3 percent and the Dow has taken a small loss.

There were still a few gainers to be found on Wall Street. Foundation Medicine jumped 28.6 percent to $136.90 after Swiss drugmaker Roche agreed to buy the rest of Foundation for $137 a share, which the companies valued at $2.4 billion.

CVS Health rose 1.9 percent to $69 after the drugstore chain and pharmacy benefits manager said it will start making home deliveries of prescriptions and other items. The service will cost $4.99 and deliveries will be made in one or two days.

The dollar fell to 109.99 yen from 110.44 yen. The euro sank to $1.1561 from $1.1615.

(BE)