Stocks dropped Monday as technology companies came under fire and fears grew about a trade war with China.
The Dow Jones industrial average plunged down more than 580 points, or 2.4 percent, by midday. The Standard & Poor’s 500-stock index was down 2.6 percent and the tech-heavy Nasdaq Composite was down 2.9 percent as volatility continues to rock markets.
As of early afternoon trading, all three indexes were negative for the year and were in correction territory. A correction is generally considered a 10 percent drop from its peak.
China’s government said Sunday that it would immediately impose tariffs on 128 U.S. commodities it imports in retaliation for President Donald Trump’s levies on steel and aluminum. The tax on U.S. goods could span pork, soybeans and fruit as well as aircraft.
The fears of an impending trade war have rocked markets since last month when Trump announced 25 percent tariffs on steel and 10 percent on aluminum that the U.S. imports.
Troubles for technology companies are another factor. Markets were dragged down Monday by the president’s Twitter assault on Amazon.com, in which he knocked the retailers relationship with the U.S. Postal Service. The retail giant’s stock was down nearly 5 percent.
“I guess as long as there is uncertainty around global trade, markets will be on edge,” said Charlie Ripley, investment strategist with Allianz Investment Management. “A lot of this today is being driven by technology. Trump had some unfavorable comments on Amazon and the Post Office, and that is helping drive down the tech sector.”
The Dow’s big laggards included Intel, Cisco, Caterpillar, 3M, Nike and Microsoft, as well as retail giants Home Depot and Walmart.
Combined with Facebook’s recent woes over user data being compromised, the Nasdaq is close to losing all its gains for 2018. That is a surprising reversal for the technology industry, which had spearheaded much of the gains of the bull market.
Facebook came under heavy fire from lawmakers last month in the United States and Britain after news reports raised questions about whether it allowed third-party developers to access the data of users without their permission — a potential violation of its privacy agreement with the U.S. government.
Facebook also finds itself in a tiff with rival giant Apple. Facebook chief executive Mark Zuckerberg over the weekend responded to Apple chief executive Tim Cook’s criticism of the social-media company’s data crisis. The scandal involved a third-party company, Cambridge Analytica, which harvested personal data on 50 million Facebook users.
Cook criticized Zuckerberg during an interview last week when he was asked what he would do if he were the Facebook chief.
“I wouldn’t be in this situation,” Cook said, adding “We care about the user experience and we’re not going to traffic in your personal life.”
Zuckerberg responded in an interview with Vox, appearing to criticize Apple’s business model as based on “serving rich people.”
“If you want to build a service that helps connect everyone in the world, then there are a lot of people who can’t afford to pay,” Zuckerberg said, referring to Facebook. “And therefore, as with a lot of media, having an advertising-supported model is the only rational model that can support building this service to reach people … But if you want to build a service which is not just serving rich people, then you need to have something that people can afford.”
Follow the Bangor Daily News on Facebook for the latest Maine news.