A flare-up of economic and political uncertainty between the United States and China continued to weigh on stock markets Thursday, as investors reckoned with the prospect of a prolonged trade war that will continue to weigh on the global economy.
The S&P 500 dropped by roughly 1 percent, putting it on course for a fourth consecutive daily decline. The benchmark index has already dropped more than 3 percent this week, its worst weekly performance of the year.
The selling began Monday after President Trump threatened a tariff increase on imports from China even as a Chinese delegation was preparing to head to Washington for the latest round of trade talks. The higher duties, of 25 percent up from 10 percent, are set to take effect at 12:01 a.m. on Friday.
The president’s salvos against China, which have continued all week, surprised businesses and investors who in recent months thought that the world’s two largest economies were growing closer to striking a deal. On Wednesday, Mr. Trump told attendees of a rally in Florida that he was happy to punish China with more tariffs because it had reneged on agreements.
“A lot more uncertainty got injected into the scenario,” said Kristina Hooper, chief global market strategist at money management firm Invesco. “And it looks like it’s going to go on a lot longer, just based on what we’ve seen happen this week.”
Worst hit in the United States were shares of companies dependent on China either as a manufacturing base or major customer. They include semiconductor makers, agriculture and fertilizer companies as well as industrial equipment manufacturers.
Boeing, one of the largest American exporters, fell more than 2.5 percent on Thursday. Its shares are down almost 8 percent this week.
Intel tumbled more than 5 percent, following an investor day presentation that left the market underwhelmed about the chip giant’s prospects. Fellow chip maker Texas Instruments fell by more than 1 percent.
All three companies receive more than 20 percent of their revenues from China, according to research from Fitch Ratings.
Fertilizer makers CF Industries and Mosaic both tumbled more than 2 percent. The companies are closely linked to the fortunes of American farmers who grow soybeans, a top export to China.
The tech-heavy Nasdaq composite index dropped more than 1 percent, as did the domestically focused Russell 2000 index of small-cap stocks.
The losses this week are beginning to eat into Wall Street’s stellar start to the year. The S&P 500 remains up about 13.5 percent in 2019, but was up as much as 17.5 percent at the end of April.
Asian markets also closed lower on Thursday, and major European markets also dropped.
The Nikkei 225 closed down 0.93 percent, while the Hang Seng in Hong Kong dropped 2.39 percent. The TAIEX in Taiwan closed 1.74 percent lower, and the Kospi in Korea slid 3.04 percent.
In afternoon trading in Britain, the FTSE 100 was down 0.9 percent. The CAC 40 in France had declined by 1.9 percent, while the Dax in Germany was 1.7 percent lower.
The yield on the 10-year Treasury note fell, a sign that some investors were parking money in safe government bonds amid the recent market tumult.