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US: Stocks fall as trade war fears rise
[NEW YORK] Wall Street stocks tumbled on Tuesday on growing worries about a trade war as President Donald Trump replaced his Secretary of State and was reportedly planning new tariffs on China.
The Dow Jones Industrial Average fell 0.7 per cent to 25,007.03.
The broad-based S&P 500 shed 0.6 per cent to 2,765.31, while the tech-rich Nasdaq Composite Index dropped one per cent, settling at 7,511.01.
Stocks opened higher after benign US inflation data reassured investors the Federal Reserve was not likely to accelerate the pace of interest rate hikes this year.
But markets began retreating later in the day.
"Wall Street is questioning the stability of the administration," said Sam Stovall of CFRA Research, adding that investors worry the Republicans could lose the midterm elections. "Today, politics was more important than inflation."
Mr Trump sacked his top diplomat Rex Tillerson and named current CIA chief Mike Pompeo to succeed him, a worry to Wall Street analysts who viewed Mr Tillerson as a fan of free markets and who fear Mr Pompeo may take a harsher line on trade issues.
Analysts also pointed to unease at reports that Mr Trump is weighing a crackdown on China over alleged intellectual property theft. An article in Politico said new tariffs could be announced as soon as next week.
Financial stocks were weak, with Bank of America and Citigroup both losing about 1.5 per cent.
Large technology shares also fell. Apple dropped one per cent, Facebook 1.6 percent and Google parent Alphabet 2.3 per cent.
General Electric was the biggest loser in the Dow, sinking 4.4 per cent after JPMorgan Chase lowered its price target on the industrial giant and said its financial outlook was worse than widely perceived.
Smartphone chipmaker Qualcomm slumped 5 per cent after the Trump administration blocked Singapore-based Broadcom's unsolicited bid for the company on national security grounds.