Stocks tumbled after President Donald Trump demanded that U.S. companies with operations in China consider moving them to other countries -- including the U.S. -- just hours after Beijing announced new tariffs on $75 billion in U.S. goods.
"The market is spooked by the escalation in the trade war," said Janet Johnston, portfolio manager at TrimTabs Asset Management. "Investors are looking for an endgame and we haven't seen it yet." The Nasdaq gave up 239.62 points, or 3%, to 7,751.77. The Russell 2000 index of smaller company stocks skidded 46.52 points, or 3.1%, to 1,459.49.
"There are just too many instances in which the package contents can't be known or verified," he said. "It's difficult to picture a scenario where UPS and FedEx are all that well-equipped to detect something like this." Some economists saw Powell's speech as setting the stage for further interest rate cuts this year. A quarter-point rate cut reduction in September is considered all but certain. Some think the Fed will cut rates again in December.