WASHINGTON — Trade war fears and a presidential attack on Amazon are rocking Wall Street.
The Dow dropped more than 700 points and the Nasdaq plunged 3% on Monday. All three major indexes are now in the red for the year.
The sell-off on the first day of the second quarter came after President Trump once again attacked Amazon on Twitter. Amazon, one of the biggest drivers of the 2017 market rally, tumbled 5%.
Trump once again accused Amazon of taking advantage of the US Postal Service, and he suggested that Amazon does not pay its fair share of tax. In fact, Amazon pays the same lower rate that the post office charges other bulk shippers, and it collects sales tax in every state that charges it.
“You’ve got the president of the United States attacking a single company over what he considers to be unfair practices,” said Ian Winer, head of equities at Wedbush Securities.
Amazon wasn’t the only tech stock in trouble. Tesla, Netflix and Intel all dropped by at least 4%. Almost every stock in the Nasdaq 100 lost ground.
The Nasdaq has plunged 9.5% from its all-time high on March 12.
Wall Street is also fretting over the risk of a trade war with China. Beijing responded to Trump’s steel and aluminum tariffs on Monday by imposing tariffs on $3 billion of US imports. The tariffs apply to 128 products, ranging from pork and meat to steep pipes.
Trump plans to place additional tariffs on about $50 billion worth of Chinese goods — and Beijing has promised to respond.
No matter the cause, signs of fear abounded. The VIX volatility index jumped more than 15%. CNNMoney’s Fear & Greed Index of market sentiment dropped further into “extreme fear.” Crude oil plunged about 3%. Gold, which tends to do well when investors are worried, climbed more than 1%.
“None of it makes a lot of sense,” said Michael Block, chief strategist at Rhino Trading Partners. “I don’t know what we learned that was new. Chinese tariffs are not surprising.”
After spiking last year, the stock market hit extreme turbulence during the first three months of the year as investors worried about tariffs, inflation and tech stocks. The Dow snapped its longest quarterly winning streak in 20 years.