(Reuters) - U.S. stocks fell about 1 percent on Thursday on the growing threat of a global trade war as the Trump administration plans to impose import tariffs on China and as technology stocks stayed under pressure.
President Donald Trump plans to impose tariffs on Chinese imports, possibly targeting the country’s high-technology sector and restricting Chinese investments in the United States. The White House said Trump would sign a presidential memorandum “targeting China’s economic aggression” at 12:30 p.m. ET on Thursday.
China blamed U.S. export restrictions for its record trade surplus with the United States, but expressed hope that a solution can be found to settle their trade issues.
“Trump seems intent on starting trade wars, most notably with China, which could trigger a wave of protectionism and drive up prices in the U.S. and likely weigh on the growth momentum,” said Craig Erlam, senior market analyst at Oanda.
Nine of the 11 major S&P sectors were in the red, with only the interest-rate sensitive utilities .SPLRCU and real estate .SPLRCR sectors higher after the Federal Reserve raised interest rates on Wednesday.
The Fed forecast at least two more hikes for 2018, but nearly half of the policy makers projected three more this year and the pace of increases is seen quickening in the next two years. That would end the years-long easy money policy that the central bank adopted to boost markets after the financial crisis.
“What we’ve got is a strong risk-off trade, which I think is a follow on to the comments from (Fed Chair Jerome) Powell and some of the Facebook issues,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. “Investors are looking to take some money off the table.”
At 9:34 a.m. ET, the Dow Jones Industrial Average .DJI fell 1.22 percent to 24,380.75. The S&P 500 .SPX dropped 1.06 percent to 2,683.15 and the Nasdaq Composite .IXIC declined 1.17 percent to 7,259.37.
The Cboe Volatility Index .VIX, the most widely followed barometer of expected near-term volatility in the S&P 500, was up 1.76 points at 19.62, after touching a three-day high of 21.24.
The S&P 500 technology index .SPLRCT, the best performing sector over the past year, fell 1.23 percent. Apple (AAPL.O), Microsoft (MSFT.O), Amazon (AMZN.O) and Alphabet GOOGL dropped 0.8 percent to 1.5 percent. Facebook’s shares (FB.O) though were little changed.
Tech stocks remained a weak spot after Facebook’s data breach issue raised fears that any failure by big tech firms to protect personal data could deter advertisers and users and invite tougher regulation.
AbbVie (ABBV.N) slumped about 11 percent after the drugmaker said it would not seek accelerated approval for its experimental lung cancer treatment based on