Dow dives more than 500 points as trade worries multiply

After gaining ground on Tuesday, stocks are tumbling again on growing investor fears about an escalating trade war between the U.S. and China.

The Dow fell 536 points, or 2.3%, to 25,482 shortly after the start of trade, while the S&P 500 and Nasdaq indexes both slid more than 1%. Bond yields, which move in the opposite direction of their prices, also declined in a sign investors are seeking to protect themselves amid significant volatility on Wall Street.

Markets have swung wildly this week after Washington and Beijing raised the stakes in their trade war. China allowed its currency to weaken after President Donald Trump said the U.S. would raise more tariffs on Chinese goods. The Treasury Department on Monday also formally labeled China a currency manipulator for the first time since 1994.

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“Whereas a few weeks ago it seemed like a detente was likely between the two countries, at least until after next year’s U.S. election, the recent round of threats of tariffs and responses suggests to us that both sides are so dug in that neither can be seen as giving into the other,” Brian Gardner, an equity analyst with Keefe, Bruyette & Woods, said in a report. 

The Dow, which tracks 30 large publicly traded companies, has fallen nearly 4% since August 1, when Mr. Trump surprised markets by saying over Twitter that the U.S. would put a 10% tariff on $300 billion of Chinese imports unless trade talks between the countries advanced. The broader S&P 500 has sunk even more during that time, losing 5%, while the tech-heavy Nasdaq has declined 4%.