The Dow was down a few hundred points in early trading but began a steep dive after an afternoon appearance by U.S. Treasury Secretary Steven Mnuchin on CNBC.
Mnuchin, in a 20-minute interview, did not rule out a trade war with China.
“Our objective is still not to be in a trade war with [China],” Mnuchin said. “I’m cautiously optimistic that we will be able to work this out.”
But he cited “the potential of a trade war.”
The Dow, which entered negative territory for 2018, saw a more than 767-point slide — about 3 percent — at its low. It finished the day 572 points down. The Standard & Poor’s 500-stock index and the Nasdaq were off 2.2 percent and 2.3 percent, respectively.
The 2018 gains made by all three major indexes were erased. The Dow was negative three of the past four weeks. On the S&P 500, 492 stocks finished the day with a loss.
“It’s Friday afternoon, there is a ton of uncertainty around both personnel in the White House and uncertainty over the public posturing around trade tariffs,” said Daniel P. Wiener, chief executive of Adviser Investments, a Newton, Mass.-based firm that manages more than $5 billion in assets. “Traders don’t like to go home for the weekend with uncertainty, so they unload. What happens over trade happens in the backroom, not on Twitter.”
The 10-year Treasury yield held near 2.8 percent and gold climbed slightly.
European markets were down slightly, while Asian markets overnight were mixed. The Hang Seng Index in Hong Kong was up more than 1 percent, while Japan’s Nikkei 225 was down a touch.
All 30 Dow stocks were in the red. Hardest hit were companies considered most vulnerable to a U.S.-Chinese trade dispute: Boeing, Caterpillar, Intel, Nike, DowDuPont, as well as JPMorgan Chase and Goldman Sachs.
All major sectors were hit, with industrials, financial services and health care bleeding the most.
“We are advising investors to focus more on defense and noncyclical parts of the market that are less likely to be affected by a trade war,” said James Norman, president of QS investors. “I am referring to consumer, real estate investment trusts, utilities and business-to-business technology companies.”
The White House on Friday also announced sweeping new economic sanctions on Russian politicians, companies and business leaders.
Investors said markets have been slow to acclimate to the way Trump operates.
“The strategy seems to be speak loudly and carry a small stick,” said Michael Farr, a Washington investment manager. “We’re not used to it. It’s disruptive. It may be effective. But for now markets are doing the math to try and adjust for the United States negotiating in public.”
The U.S. Labor Department also on Friday released a tepid jobs report that showed March hiring was strong, but the pace slowed a bit from previous months. The U.S. unemployment rate remained at 4.1 percent, and payrolls added 103,000 non-farm jobs last month, far below expectations of 178,000.
The unemployment rate remained at a nearly 18-year-low, reflecting a tight job market. Wage growth picked up slightly. Average hourly wages rose 0.3 percent in March compared with 0.1 percent in February, pushing the annual average in hourly gains to 2.7 percent.
Brad McMillan, chief investment officer at Commonwealth Financial Network, called the jobs report “surprisingly weak . . . but not terrible.”
“Weakness looks to be due to lack of available workers,” McMillan said. But he said that “given the persistence of wage growth,” the Fed will probably continue on its path to raise rates.
Earlier in the week, technology stocks were rocked by worries that some of the nation’s most dynamic companies — including Amazon.com, Apple, Alphabet, Facebook and Microsoft — are facing political, regulatory and market challenges that could put the brakes on growth in the sector.
“The main conclusion I draw from all of this is you have a U.S. equity market that is pretty fairly valued, if not overvalued,” said Christine Benz, director of personal finance at Morningstar. “So it seems the stock market is cruising for a bruising. The market is responding to news about tariffs; before that it was privacy issues in the technology sector. It seems like we are going to run into one thing after another given current valuations.”