Dow drops 500 points on news of Trump’s steel tariffs

Major stock indexes plunged Thursday afternoon following President Trump's announcement that he was imposing a 25 percent tariff on imported steel and 15 percent on aluminum.

The news sent the Dow Jones industrial average down more than 500 points, toward a 2 percent decline. The Standard & Poor's 500-stock index dropped 1.2 percent and the technology-heavy Nasdaq composite was down 1.3 percent.

'Traders are, again, focused on talk of tariffs while investors are focused on earnings growth, continuing low inflation and highly accommodative interest rates,” said Daniel Wiener, chief executive officer of Adviser Investments, a Newton, Mass.-based firm that manages more than $5 billion in assets. 'Volatility is back, but that shouldn't sway investors from their longer-range objectives.”

The Dow was already reeling from a 380 point decline on Wednesday on fears of continued interest rate hikes by the Federal Reserve. New Fed Chairman Jerome Powell spoke this week before Congress, where he left open the possibility of four rate hikes this year instead of three.

Volatility has returned to markets with a vengeance. The Dow and S&P sank 10 percent into correction territory in early February on a positive Labor Department report on wages that inflamed Wall Street's fears of inflation.

The Dow Jones industrial average on Wednesday closed out a wildly volatile February. The down February broke 10 consecutive months of gains, which is the most since 1959.

The hardest-hit sectors were energy, utilities, real estate and technology, which were all down 10 percent, considered to be a correction.

Boeing, United Technologies and Intel were among the big drags on the Dow.

Trump announced the tariffs Thursday morning from the Cabinet Room of the White House, where he was surrounded by steel and aluminum executives including Roger Newport of AK Steel, John Ferriola of Nucor, Dave Burritt of U.S. Steel Corporation, and Tim Timkin of Timken Steel.

The announcement is part of a protectionist approach the president has promised as a way to protect American jobs and industry. But many business people, including manufacturers, don't like protectionism because it can raise their materials costs. Wall Street generally doesn't like tariffs either.

'Protectionism doesn't work,” Washington investment manager Michael Farr said. ' A fair playing field is essential, but anything that dampens trade is bad for the U.S. economy and markets. These broad tariffs with not much insight into current imbalances seem ham-handed and clearly were unwelcome by markets.”