Investing.com – Wall Street slumped on Thursday as fears that the U.S.-China trade war will have profound and long-term consequences for growth spooked investors.
The S&P 500 fell 35 points or 1.2% by 9:44 AM ET (13:44 GMT), while the Dow lost 346 points or 1.3% and tech-heavy Nasdaq composite was down 114 points or 1.5%. The Nasdaq has under-performed all week on fears that the tech sector will be hurt more than most as the U.S. tries to stop China attaining world leadership in technologies such as 5G.
China told Washington overnight to correct its "wrong actions" in order for trade talks to continue. The comments were in response to the U.S. blacklisting Chinese tech giant Huawei last week, a development that has led companies to drop its smartphones from their 5G offerings. That's on top of various governments signalling it will restrict Huawei's involvement in the rollout of 5G spectrum networks. The White House is looking at the possibility of blocking more Chinese companies from the American market, something that could trigger more equity sell-offs.
"It has moved into a broader trade war. Initially, it was about tariffs and retaliation, now you're talking about banning companies and it's not looking good in the near-term," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
"If you look at the U.S. economy a lot of the growth in earnings comes from what's happening overseas. Now we see that's not been helpful and as the domestic economy slows more than expected, that also could have a negative impact."
Technology stocks were again among the hardest hit, with Qualcomm (NASDAQ:QCOM) down 2.9%, Micron (NASDAQ:MU) falling 3.7% and Apple (NASDAQ:AAPL) slipping 1.6%.
Tesla (NASDAQ:TSLA) declined 1.4% after analysts warned that the electric car company is likely to miss its 2019 delivery target, partly because of the risk it will be hit by Chinese countermeasures on trade.
Boeing (NYSE:BA) fell 2.5% ahead of a Federal Aviation Authority meeting with international regulators to discuss the continued grounding of the airplane makers 737 Max. The agency has warned that the model could be grounded beyond October.
In commodities, gold futures rose 0.5% to $1,280.35 a troy ounce, while crude oil slumped 4% to $58.91, its lowest level in two months. The U.S. dollar index, which measures the greenback against a basket of six major currencies, was up 0.4% to 98.222.
-Reuters contributed to this report.