Stocks fell, the dollar gained and commodities slid as markets reeled from fresh salvos in the escalating trade war between the US and China.
The S&P 500 Index ended the longest rally in a month after the Trump administration said it will slap tariffs on an additional $200 billion of Chinese products.
The Asian nation vowed to retaliate, helping to drive down shares in Europe and Asia. Metals bore the brunt of the reaction in commodities: Copper, nickel and zinc all tumbled.
Trade-sensitive shares in the US led declines, with Caterpillar Inc. and Boeing Co.
slumping along with Freeport-McMoRan Inc. and Deere & Co.
Emerging-market equities fell more than 1 percent to halt a three-day climb. Crude slipped below $73 a barrel in New York.
The dollar rose by the most in more than a week, while 10-year Treasury yields were little changed after US wholesale prices rose from a year ago in June by the most in more than six years.
“With tariff news moving once again to the front burner, market reaction abroad last night and early this morning underscores global market uncertainty as to the impacts of tariffs on economics and corporate profitability,” Ernie Cecilia, chief investment officer at Bryn Mawr Trust Co., said.
“It also highlights clearly that short term market movements, at the index level, are driven more so by headlines.”
The newest salvo in the trade war shattered the momentary calm in the markets that had allowed investors to turn their focus to earnings and growth in the economy and sent the
S&P 500 to the highest close since February.
Investors continue to be caught in a push and pull between corporate results, which begin to pile in this week, and the growing specter of the trade war.
Earnings season gets into gear with JPMorgan Chase & Co. and Citigroup Inc. among the largest companies due to give results, as well as India’s Infosys Ltd.
The most noteworthy US data may be the June inflation report on Thursday, which consensus expects will show both headline and core price growth picking up.
There’s another deluge of Treasury debt sales too, with a total $156 billion of notes and bills offered during the week.
Chinese trade data due at the end of the week will probably show slightly slower export growth, after early indicators pointed to softer overseas demand and weaker export orders, Bloomberg Economics said.
The S&P 500 Index sank 0.6 percent in New York. The Dow Jones Industrial Index declined 0.7 percent. The Stoxx Europe 600 Index fell 1 percent, the biggest tumble in more than two weeks. The Topix Index declined 0.8 percent to 1,701.88. Hong Kong’s Hang Seng Index fell 1.1 percent, the largest fall in more than a week.
The Bloomberg Dollar Spot Index gained 0.3 percent. The Japanese yen dropped 0.5 percent to 111.28 per dollar. The offshore yuan rose 0.1 percent to 6.6888 per dollar. The euro fell 0.2 percent at $1.1725.
The yield on 10-year Treasuries rose less than one basis point to 2.85 percent.
West Texas Intermediate crude fell 2.3 percent to $72.39 a barrel. Gold declined 0.6 percent to $1,247.66 an ounce.