Stock market tumbles as Trump makes more trade threats

U.S. stocks were trading sharply lower on Monday, with the Dow industrials down more than 400 points, as fresh threats from President Donald Trump against the U.S.’s trading partners undercut investor sentiment.

What are the benchmarks doing?

The Dow Jones Industrial Average tumbled 402 points, or 1.6%, to 24,174, after posting it biggest weekly decline since March 23, with a loss of 2% last week. The blue-chip index is down 2.1% year to date.

The S&P 500 fell 46 points, or 1.7%, to 2,709, with nine of the 11 main sector trading lower. Technology, energy and consumer-discretionary shares led the declines, down more that 2%.

A measure of implied volatility, Cboe Volatility Index  soared 27% to 17, a four-week high.

The technology-heavy Nasdaq Composite Index declined 185 points, or 2.4%, to 7,507 amid reports of new efforts to block Chinese investment in and sales to U.S. tech firms.

What’s driving markets?

Trade hostilities were once again weighing on U.S. stock-market indexes. In a Twitter post on Sunday, Trump called on trading partners to remove their “trade barriers and tariffs or be met with more reciprocity by the U.S.”

On Sunday, the People’s Bank of China said Sunday it will cut the amount of reserves banks are required to keep with the central bank, which will free up more than $100 billion for commercial banks to boost lending and restructure debt.

Signs of a prolonged trade war took a toll on stocks last week, as investors grow increasingly concerned that the global economy could take a hit from those tensions.

What analysts are saying?

“Investors continue to pull away from industries that are most likely to be impacted by the trade tariffs,” said Shannon Sacoccia, chief investment officer at Boston Private Wealth LLC.

“We believe that the trade rhetoric will end with some sort of agreement on how to move forward, but it has the potential to shake the markets over the next several weeks. The biggest question is whether tariffs, which are scheduled to be implemented in July will impact third-quarter earnings and the economy in general,” said Sacoccia.

How are other markets performing?

International benchmark Brent oil  was down $1.33, or 1.8%, to $74.00 a barrel on Monday.

On Saturday, Russia said it would back an Organization of the Petroleum Exporting Countries plan put forward by Saudi Arabia to increase global oil production by 1 million barrels a day, starting next month.

Gold futures  were modestly lower at $1,270.30 an ounce. European stocks dropped sharply on trade worries, while Asian markets finished lower for largely the same reason.

The ICE U.S. Dollar Index was slightly lower at 94.369.

What stocks are in focus?

Shares of Carnival Corp.  sank 8.3% after the cruise ship operator beat fiscal second-quarter profit expectations, but cut its full-year outlook.

Rivals Royal Caribbean Cruises Ltd  and Norwegian Cruise Line Holding Ltd  also fell sharply, down 5.6% and 7.9% respectively.

Shares of Harley-Davidson Inc.  declined by 5.3% after the motorcycle maker said EU tariffs on the company’s motorcycles increased to 31% from 6%, and will raise the cost of the average motorcycle to the EU from the U.S. by about $2,200.

Education Realty Trust Inc.  shares rose 1.4% after the owner of college housing communities said it has entered into a definitive merger agreement to be bought by the newly formed Greystar Student Housing Growth and Income Fund, LP. in an all-cash deal valued at around $4.6 billion, including debt.

TV station operator Gray Television Inc.  soared 10% after announcing it has reached an agreement to buy employee-owned local media company Raycom Media Inc. in a deal valued at $3.65 billion, including $100 million of Raycom cash.

Shares of General Electric Co. were off 1.6% after a report that the conglomerate is nearing a deal to sell its industrial-engine unit for $3 billion to private-equity firm Advent International.

Semiconductor stocks , as measured by the iShares PHLX Semiconductor ETF were taking a beating Monday morning after reports that President Donald Trump hopes to announce further restrictions on Chinese investment in U.S. tech companies.

Shares of Micron Technology Inc.  and Advanced Micro Devices Inc.  slid about 7%.

Economic reports

The Chicago Fed national activity index for May fell to -0.15 in May from +0.42 in April.

New-home sales ran at a seasonally adjusted annual 689,000 rate in May, beating consensus estimate of 668,000. The median sales price in May was $313,000, 3.3% lower than a year ago.

Check out: MarketWatch’s Economic Calendar