Stocks fell sharply on Thursday, erasing a big surge from earlier in the day, after President Donald Trump said the U.S. would impose an additional 10% tariff on Chinese imports to the U.S.
The Dow Jones Industrials had jumped by the hundreds of points, but in the end, observed declines of 280.85, or 1.1%, on Thursday to 26,583.42
The S&P 500 also took a nose dive, of 26.82 points, to 2,953.56. The NASDAQ subtracted 64.3 points to 8,111.12
Since 1950, August has been the second-worst month for the S&P 500, having averaged a loss of 0.1% in August.
Tech shares led the rally as the sector gained 2.2%. Western Digital was the best-performing stock in the sector, jumping 6.8%. Other tech-related stocks like Facebook, Amazon, Apple, Netflix and Alphabet also traded higher.
Trump said in a series of tweets the tariff will be imposed on $300 billion worth of Chinese goods. The levy will take effect Sept. 1.
Shares of Caterpillar and Deere, two bellwethers of global trade, closed more than 2.6% lower. Boeing ended the day down 2%. FedEx shares also fell 4.2%.
Apple, which has managed to avoid large hits from U.S.-China trade tariffs, fell 2.2%. The tech giant told U.S. Trade Representative Robert Lighthizer on June 17 that tariffs on the remaining $300 billion in Chinese imports would cover “all of Apple's major products.”
Retail stocks like Nike dropped 3.4%. Yeti Holdings dropped 7% while PVH slid 6.9%.
Hopes for another rate cut increased after IHS Markit's U.S. manufacturing PMI dropped to its lowest level since September 2009. IHS said employment in the sector fell to its lowest level since 2013. Muted client demand and a slower increase in production weighed down the manufacturing space.
The Institute for Supply Management's reading on the manufacturing sector fell to 51.2 in July, its lowest level since August 2016. Economists expected a print of 52.
The Fed cut interest rates by 25 basis points on Wednesday — its first cut in more than a decade — citing “global developments” along with “muted inflation” as reasons for easing monetary conditions.
But Chairman Jerome Powell told reporters in a news conference following the Federal Open Market Committee's rate decision that the central bank's rate cut was a “midcycle adjustment,” hinting that further rate cuts later this year were not a sure thing.
Prices for the benchmark 10-year U.S. Treasury rose sharply, lowering yields to 1.9% from Wednesday's 2.01%. Treasury prices and yields move in opposite directions
Oil prices removed $4.11 to $54.47 U.S. a barrel.
Gold prices regained $17.20 to $1,455.00 U.S. an ounce.