The Dow Jones industrial average slid 244 points, worsening losses from the year’s worst trading day, as global trade disputes and bond-market indicators triggered recession fears.
The blue-chip index fell 0.9% to 25,784 in afternoon trading in New York after an earlier decline of more than 500 points, while the broader S&P 500 dropped 0.7% and the tech-heavy Nasdaq tumbled 0.5%. Gold, which many investors consider a safe haven when securities like stocks and bonds are losing value, climbed 2.4% to $1,518 an ounce.
The Dow’s declines built on a 767-point tumble Monday amid an escalating dispute between the United States and China, whose currency values have dipped as the White House imposed 25% duties on $250 billion of its goods and announced 10% levies on the country’s remaining exports to the U.S.
“The trade war is playing front and center for all market participants,” Wayne Wicker, who oversees $28.8 billion in retirement plans for Washington-based ICMA-RC, told the Washington Examiner. “Given the fact that we haven’t had any positive progress on trade discussions, it’s adding much greater uncertainty that escalation in the trade war will really spur a global recession.”
The spread between between three-month and 10-year Treasury notes, meanwhile, is signaling growing risks of a recession as investors demand more for the short-term securities than for those maturing over a decade.
Typically, the yield for long-term notes is higher since conditions far in the future are more difficult to predict, and the short-term notes are viewed as safer during periods of economic stability.
While business leaders have warned President Trump’s protectionist moves may undermine U.S. growth, he said Wednesday the volatility was to be expected and that he, personally, would have anticipated worse.
“Ultimately, it’s going to go much higher than it ever would’ve,” Trump told reporters before leaving the White House for visits to the El Paso, Texas, and Dayton, Ohio, the sites of mass shootings over the weekend. Trump said he remains committed to lowering a trade imbalance with China, which he accused of taking advantage of the U.S. for decades, and negotiating a more level playing field for international commerce.
