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As the Trump administration declared that it would apply new tariffs on Chinese goods, a vast decline in US stocks was witnessed on Wednesday. This move has further aggravated tensions amongst the US and its significant trading partners. Such a step is feared by investors as this could transform into an out and out war on trade. The Dow Jones Industrial Average DJIA, -0.88% fell to 0.9%. The S&P 500 SPX, -0.71% closed further down 0.7%. The Nasdaq Composite Index (COMP), -0.55% lost out on 0.6%.

All the above three posted the earliest of negative sessions, which is of the past 5. In addition to this, widespread losses are noted on this day. This is because out of the total 11 S&P 500 sectors, 10 ended at the lower end on this day. Both of the material and industrial are increasingly correlated with issues related to trade, found themselves amongst the top decliners. These industries have failed larger than a 1.5%.

In the energy sector, a drop of 2.2% was noticed, which weighed on the market. This drop occurred due to the fact that crude oil CLK9, +2.09% went through its highest drop in a day if a time period of more than one year is considered. If specific stocks are considered, Boeing Co. (BA), -1.89% fell 1.9% and Caterpillar Inc. (CAT), -3.18% lost a 3.2%. Chevron Corp. CVX, -3.19% lost a 3.2%.

Due to the falling of the stocks on Wednesday, a streak of four sessions that contained gains, has been broken. The tariffs on the Chinese goods will be imposed on an additional of $200 billion of these goods. China has replied to the President of the United States, Donald Trump that such a step is bullying and will hit back.