The S&P 500 notched its worst week in more than two years Friday, as stocks continued to retreat while investors weigh the impact of tariffs and higher interest rates.
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The Dow Jones Industrial Average tumbled 424.69 points, or 1.77%, to 23,533.20. The S&P 500 fell 55.43 points, or 2.1%, to 2,588.26. The Nasdaq Composite was down 174.01 points, or 2.43%, at 6,992.67.
The S&P and Nasdaq recorded their worst weekly performances since January 2016, led by a sell-off in financial and technology stocks. The S&P was down 5.95% this week, while the 30-member Dow lost 5.67% and entered correction territory.
President Donald Trump announced on Thursday that he plans to impose tariffs on roughly $50 billion in Chinese imports. China has threatened to fight back, saying it will pursue tariffs on $3 billion in U.S. products such as steel, pork and wine.
“Understandably, the prospect of a trade war between the world’s two largest economies is not particularly desirable for investors,” said Craig Erlam, senior market analyst at Oanda. “The global economy is finally starting to tick along nicely after a decade of efforts to repair the damage of the global financial crisis and the issues that followed and now we’re potentially having to deal with an entirely self-inflicted and avoidable problem.”
The CBOE Volatility Index, which measures price swings in stocks, climbed 6.3% to 24.80 in recent trading. Stock losses accelerated into the close Friday, and some investors may have pulled back from equities to avoid holding long positions heading into the weekend, according to Sarge986 President Stephen Guilfoyle on FOX Business’ “After the Bell.”
The market also considered economic reports released Friday. New home sales dipped slightly in February versus January’s revised reading.
Orders for durable goods, key U.S. products that are expected to last at least three years, jumped 3.1% in February, much stronger than the 1.5% estimate.
West Texas Intermediate oil closed at an eight-week high, rising 2.5% to $65.88 a barrel.
The benchmark 10-year Treasury note moved lower to 2.81%. Yields fall as prices rise.
Investors are also watching staff changes at the White House. Trump shook up his foreign policy team again on Thursday, replacing H.R. McMaster as national security adviser with John Bolton, who has advocated using military force against North Korea and Iran. Bolton, who served as U.S. ambassador to the United Nations, was also a Fox News contributor until his appointment last night.
The move came little more than a week after Trump fired Rex Tillerson as secretary of state and nominated Central Intelligence Agency Director Mike Pompeo to replace him.
Ken Martin contributed to this report.