S&P 500 and Dow Jones Industrial Average opened lower on Tuesday after a one-day bounce, as Wall Street turned jittery after China threatened retaliatory measures against the United States' plan to impose 100% import tariffs.
Minutes into the trade, the Dow Jones Industrial Average fell 386 points or 0.84%, S&P 500 also fell over 0.97%, while Nasdaq was down 1.42%.
China, earlier on Tuesday, announced sanction on five of South Korea's Hanwha Ocean's US subsidiaries. This will forbid companies and individuals from doing business with affected organisations. The move, according to the Chinese government, will strengthen Beijing's security.
This came four days after US President Donald Trump threatened to place additional 100% tariffs on Chinese imports. This sent shock waves through the markets, with Dow falling over 800 points and S&P 500 hitting its biggest one-day loss since April.
However, Trump soon softened his stance on Sunday when he said, “Don't worry about China, it will all be fine." Subsequently, the S&P 500 and Dow Jones jumped 1% each on Monday, while Nasdaq also ended in the green.
“China might need the US a lot more than the US needs China, but the US still does need them,” Matt Maley at Miller Tabak told Bloomberg. “Therefore, as much as earnings season will be very important going forward, the tariff/trade issue has suddenly become issue number one again,” he added.
In the early minutes of trading, 10 of the 11 sectoral indices was trading in red. Consumer discretionary, communication services and energy sector led the decline, while consumer staples was the only sector in green.
Walmart Inc., Coca-Cola Co., Procter & Gamble Co. were amongst the gainers for the day. On the other hand, Nvidia Corp., Goldman Sachs Group Inc., Amazon.com Inc., JPMorgan Chase & Co. and Nike Inc. were in the red.
As the US market opened, spot gold rose 1.6% to $3,821.73 an ounce after hitting record high. Crude oil prices fell, with the West Texas trading 1.56% lower at $58.60 per barrel.
The Bloomberg Dollar Index rose 0.1%, with the British Pound falling 0.3% at $1.3288 and the Japanese yen was at 152.01 per dollar.
Bitcoin, the largest traded cryptocurrency was down 4.4% at $110,690.58.
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