NEW YORK (Reuters) - U.S. stocks dropped about 2 percent on Friday, with the Dow falling more than 570 points, as U.S. President Donald Trump’s latest tariff threat on Chinese imports fueled increasing concern over a U.S. trade war with China.
Stocks added to losses and hit session lows in afternoon trading after Federal Reserve Chairman Jerome Powell said the U.S. central bank will likely need to keep hiking interest rates to keep inflation under control and said it was too soon to know if rising trade tensions would hit the U.S. economy.
Fears of a trade war since Trump announced tariffs on steel and aluminum imports more than a month ago have kept investors on edge over concerns that such protectionist measures would hit global economic growth.
“It’s a reaction to concerns about the administration’s approach to trade. The market has vacillated between writing it off as just talk and assuming there could be a serious problem,” said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey.
He and others said investors also appeared to be reducing risk ahead of the weekend.
“If the market is down it often tends to accelerate on Friday. Investors don’t want to take the risk of coming in Monday after having something happen over the weekend,” Meckler said.
Trump late Thursday threatened to slap $100 billion more in tariffs on Chinese imports, while Beijing said it was fully prepared to respond with a “fierce counter strike”.
U.S. companies seen as more likely to be hit by trade tensions with China were among the biggest drags on the Dow, including Boeing (BA.N), down 3.1 percent. The S&P 500 industrials index .SPLRCI, down 2.7 percent, had the biggest losses among sectors,