Dow drops more than 500 points on tariff and trade worries

U.S. stocks dropped sharply in another dizzying day of trading on Thursday as investors feared that Trump administration tariffs on imported steel and aluminum will lead to retaliation from other countries. The Dow Jones industrial average lost more than 500 points.

President Donald Trump told industry executives he will impose a tariff of 25 percent on imported steel and 10 percent on aluminum “next week.” Investors wondered if that will lead to other countries putting up barriers that will hurt the global economy as well as profits for U.S. exporters like Apple.

The Standard & Poor’s 500 index was down 46 points, or 1.7 percent, at 2,667 as of 2:25 p.m. Eastern time. The index is coming off its worst month in two years, when concerns about higher inflation and rates helped trigger a 10 percent drop.

The Dow Jones industrial average fell 503 points, or 2 percent, to 24,525. It was down as much as 586 points earlier. The Nasdaq composite lost 127 points, or 1.8 percent, to 7,145.

U.S. Steel was up $2.26, or 5.2 percent, to $45.77, and AK Steel jumped 45 cents, or 6.5 percent, to $5.50. Those companies make the vast majority of their sales in the U.S, but they made far larger gains earlier in the afternoon.

Industrial companies that could be hurt by higher steel prices fell. Heavy equipment maker Caterpillar lost $5.28, or 3.4 percent, to $149.35 and aerospace giant Boeing gave back $14.64, or 4 percent, to $347.57.

Technology companies and drugmakers also fell, as they make much of their revenue outside the U.S. and could be vulnerable if other countries respond with tariffs of their own. Apple gave up $4.65, or 2.6 percent, to $173.47 and Pfizer shed $1, or 2.7 percent, to $35.32.

As a candidate, Trump often campaigned on an “America First” trade policy, but hadn’t taken many steps to implement that since he took office.

Earlier, shares of the steelmakers swung wildly amid speculation that the U.S. government would impose tariffs or quotas on steel and aluminum imports. They surged in the morning following reports that the White House planned to make the announcement shortly, only to lose most of the gains when subsequent reports said the announcement may not happen.

Stocks were higher earlier in the day after Federal Reserve Chairman Jerome Powell testified before Congress and appeared to calm one of the market’s main worries when he said that he does not see inflation in workers’ wages “at a point of acceleration.” Investors have been nervous about the possibility that the Fed may get more aggressive about raising interest rates to beat down inflation.

Worries about the possibility of much higher interest rates have been at the center of the market’s troubles over the last month.

Earlier in the week, Powell helped send Treasury yields jumping and stocks tumbling when he said that he’s feeling more optimistic about the economy. Some traders took that as a signal that the Fed may raise rates more quickly than expected.

On Thursday, though, he said that “I would expect that some continued strengthening in the labor market can take place without causing inflation.”

The yield on the 10-year Treasury note dipped to 2.81 percent from 2.86 percent late Wednesday.

Overstock.com dropped 7.7 percent after the online retailer disclosed in a regulatory filing that the Securities and Exchange Commission asked the company last month for information about a $250 million offering by its blockchain subsidiary, tZero, related to digital tokens. The stock sank $4.67 to $57.73.

The disclosure follows a report in the Wall Street Journal that the SEC sent subpoenas to dozens of companies demanding information about initial coin offerings and cryptocurrencies, which aren’t bound by the same rigorous rules that govern public offerings of stock.

Patterson Companies fell to the biggest loss in the S&P 500 after it reported weaker earnings for the latest quarter than analysts expected and said that its chief financial officer was leaving. Shares of the company, which sells dental and animal health products, dropped $8.80, or 27.9 percent, to $22.78.

Oil prices continue to drop following a report on Wednesday that showed more crude supplies in inventories last week than analysts expected. Benchmark U.S. crude fell 68 cents, or 1.1 percent, to $60.96 per barrel. Brent crude, the international standard, lost 94 cents, or 1.5 percent, to $63.79 a barrel.

Gold dropped $1.70, or 1 percent, to $1,305.20 an ounce.

The dollar dipped to 106.40 from 106.66 yen late Wednesday. The euro inched up to $1.2205 from $1.2203, and the British pound slipped to $1.3732 from $1.3771.

France’s CAC 40 fell 1.1 percent and Germany’s DAX was down 2 percent. The FTSE 100 in London dropped 0.8 percent. In Asia, Japan’s Nikkei 225 lost 1.6 percent and Hong Kong’s Hang Seng rose 0.6 percent.