U.S. stocks fell sharply in early trading Tuesday after President Donald Trump cast doubt over the potential for a trade deal with China this year and threatened to impose tariffs on French goods.
Trump said he has “no deadline” for a deal and didn’t mind waiting until after the election next year to make one. Investors had been hoping for a deal this year, or at least enough progress to stave off new U.S. tariffs on Chinese goods, including smartphones and laptops, scheduled to start Dec. 15.
The S&P 500 index fell 1.3% as of 10 a.m. The Dow Jones industrial average fell 393 points, or 1.4%, to 27,388. The Nasdaq fell 1.4%. The Russell 2000 index of smaller company stocks fell 1%.
Asian and European markets also fell.
Trump later said he wasn’t worried about the market sinking over his remarks. Trump told reporters on the sidelines of the NATO summit in London that the stock market has reached record highs recently so it’s OK that the market fell.
He said he has to make the right trade deal with China—one that’s good for the United States.
Trump said ”If it’s an even deal, it’s no good.”
Wall Street is also weighing the potential for an expanded series of trade disputes after a month of relative calm. On Tuesday, Trump proposed tariffs on $2.4 billion in French products in retaliation for a tax on global tech giants including Google, Amazon and Facebook. That follows a threat Monday to raise tariffs on steel and aluminum from Argentina and Brazil.
Technology stocks led the losses. The sector is highly sensitive to twists in the trade dispute because many of the companies rely on China for sales and supply chains. Apple shares slumped 2.5% and Intel fell 2.4%.
Bank stocks also suffered heavy losses as investors headed for the safety of bonds and pushed yields lower. Banks rely on higher bond yields to charge more lucrative interest rates on mortgages and other loans. The yield on the 10-year Treasury fell sharply, to 1.74% from 1.83% late Monday.
Bank of America shed 2.3% and Citigroup fell 2.2%.
Utilities and real estate companies held up the best as investors shifted money to the safe-play sectors.