Stocks kicked off the week trading lower on Monday as the Trump administration is reportedly preparing to restrict investment in U.S. technology by Chinese companies.
The Dow Jones Industrial Average dropped 164 points, with Boeing and Intel as the biggest decliners in the index. The S&P 500 fell 0.5 percent as tech declined 1 percent. The Nasdaq composite pulled back 0.8 percent as Facebook, Amazon, Netflix and Google-parent Alphabet dropped.
The Wall Street Journal reported Sunday that President Donald Trump plans to bar several Chinese companies from making investments in U.S. tech. The newspaper also reported that the administration wants to block additional technology exports to China. Both measures are expected to be announced by the end of the week.
Increasing trade tensions between the U.S. and its key trade partners, including China, have kept Wall Street on edge. The major indexes finished last week lower after Trump asked the U.S. trade representative to target $200 billion worth of Chinese products for tariffs. Trump also raised the possibility of slapping a 20 percent charge on European cars.
Peter Boockvar, chief investment officer at Bleakley Advisory Group, said in a note there are three goals the administration wants to complete with these tariffs: to protect tech companies from Chinese theft, to lower trade barriers set by other countries relative to the U.S. and lower the trade deficit.
“As for the first concern, we don’t seem to have made any progress addressing with the current tariff plan but are at least calling China out deservingly so. The 2nd one might be gaining some traction in bits and pieces and hopefully continues. The 3rd is only a symptom of everything else,” he said. “Either way, and regardless of how one thinks this should all be handled, the means to the intended end is immediately having negative real world impacts.”
Shares of chipmakers Intel, Micron Technology and Nvidia all fell at least 1.5 percent. Boeing, Caterpillar and General Motors — all companies with significant exposure to China — also fell.
Treasury yields slipped as investors bought bonds amid the trade tensions. The benchmark 10-year yield fell to 2.893 percent while the two-year yield slipped to 2.545 percent.
Campbell Soup rose more than 5 percent on a report from the New York Post that said the company is drawing possible takeover interest from Kraft Heinz.