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 405 points, with Boeing and Intel among the biggest decliners in the index. The 30-stock index also fell below its 200-day moving average for the first time since May 3.
The S&P 500 fell 1.7 percent as tech declined 2.5 percent. The Nasdaq composite pulled back 2.3 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.
Stocks briefly came off their session lows after Treasury Secretary Steven Mnuchin called the Journal's story "fake news" in a tweet.
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.”
Harley-Davidson shares fell 4.8 percent after the company announced it will shift production of motorcycles headed for Europe to factories outside the U.S. The company sold nearly 40,000 bikes to the European Union , second only to the U.S.
Shares of chipmakers Intel, Micron Technology and Nvidia all fell at least 3 percent. Boeing, Caterpillar and General Motors — all companies with significant exposure to China — also fell by 2.2 percent, 2.1 percent and 0.8 percent, respectively. Boeing, Caterpillar and GM were also on track to post large monthly losses.
The CBOE Volatility Index (VIX), regarded as the best gauge of fear in the market, traded above 16.
Overseas markets fell broadly. In Europe, the Stoxx 600 index dropped 1.8 percent while the German Dax fell 2 percent. 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 10 percent on a report from the New York Post that said the company is drawing possible takeover interest from Kraft Heinz.