May 23, 2019 12:47 pm
Updated: May 24, 2019 12:49 pm

Stocks tumble amid worries of a U.S.-China tech war

ABOVE: Stocks dropped on Thursday as the U.S. and China stepped up their verbal attacks in the trade war between the two countries.

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U.S. stock indexes fell more than one per cent on Thursday, as investors sold off technology, industrials and energy stocks on fears that a spiraling trade war between the United States and China would crimp global growth. Canada’s benchmark S&P/TSX Composite Index was down almost 0.9 per cent around noon on Thursday.

Technology, among sectors most exposed to China, was the hardest hit. Microsoft Corp and Apple Inc were down more than one per cent, dragging the sector lower, while the chip index dropped 2.3 per cent.

WATCH: Trump hints that U.S. could ease embargo on Huawei in exchange for trade deal with China


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Oil prices plunged more than four per cent on trade fears, leaving the energy index down 3.2 per cent, the biggest decliner among the major 11 S&P sectors.

Materials, financial and consumer discretionary sectors also posted losses of more than 1 per cent in a broad-based decline.

READ MORE: U.K., Japan stall release of new Huawei phones over global ‘uncertainty’

“This is a textbook defensive move,” said Shawn Cruz, manager of trader strategy at TD Ameritrade in New Jersey.

“The one thing that can give markets some reprieve is that if the U.S. and China come back to the negotiating table and delay the tariffs they have already put in place.”

Beijing said on Thursday Washington needs to correct its “wrong actions” for trade talks to continue after the United States blacklisted Huawei Technology Co Ltd last week.

In further evidence of the trade war hitting the domestic economy, data from IHS Markit showed U.S. manufacturing growth measured its weakest pace of activity in nearly a decade and new orders fell for the first time since August 2009.

WATCH: U.S. is underestimating Huawei, says founder

The newest round of U.S. tariffs on Chinese imports will cost the typical American household $831 annually, according to a Federal Reserve Bank of New York research.

Stocks have succumbed to selling pressure in May after Washington and Beijing engaged in tit-for-tat tariffs and other retaliatory measures, with the S&P 500 on track to post its worst monthly decline since the December sell-off.

READ MORE: ‘Restricted to a limited space’: Huawei CFO house arrest sharply contrasts Canadians detained in China

At 11:23 a.m. ET, the Dow Jones Industrial Average was down 357.04 points, or 1.39 per cebt, at 25,419.57. The S&P 500 was down 37.88 points, or 1.33 per cent, at 2,818.39 and the Nasdaq Composite was down 117.30 points, or 1.51 per cent, at 7,633.54. At 12:11 p.m. ET, the S&P/TSX Composite Index was down 147.94 points, or 0.91 per cent.

U.S. Treasury yields dropped, and two yield curve indicators briefly inverted on Thursday, sending the banking index down 1.95 per cent.

Defensive utilities was up 0.2 per cent, while real estate was flat.

WATCH: U.S. government eases restrictions on Huawei

Among other stocks, NetApp Inc slumped 11.9 per cent, the most on the S&P 500, after the data storage equipment maker forecast current-quarter profit and revenue below Wall Street estimates.

In a bright spot, L Brands Inc jumped 12.5 per cent after the retailer reported better-than-expected quarterly earnings.

Declining issues outnumbered advancers for a 3.96-to-1 ratio on the NYSE and a 4.12-to-1 ratio on the Nasdaq.

WATCH: Morneau says Canada to take a ‘measured approach’ on possible U.S. ban of Huawei

The S&P index recorded 20 new 52-week highs and 21 new lows, while the Nasdaq recorded 18 new highs and 134 new lows.

— With files from Global News reporter Erica Alini

© 2019 Reuters

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