© Reuters. FILE PHOTO - Traders work on the floor of the NYSE in New York© Reuters. FILE PHOTO – Traders work on the floor of the NYSE in New York

By Ankur Banerjee

(Reuters) – The Dow industrials fell more than 1 percent for a fourth straight day on Friday on mounting fears of a global trade war following President Donald Trump’s promise to impose import tariffs on steel and aluminum.

EU sources told Reuters the European Union was considering applying 25 percent tariffs on around $3.5 billion of imports from the United States if Trump carries out his plan to apply global duties to steel and aluminum.

All but eight of the 70 members of the broader S&P industrial index (SPLRCI) were lower, reflecting fears that the costs of their raw materials will rise along with barriers to their trade outside of the United States.

Declines since Trumps announcement on Thursday have turned the Dow negative for the year. Shares of Boeing (N:BA) Caterpillar (N:CAT) and 3M (N:MMM) were among the biggest drags on the index.

“The (tariff) announcement has also come at a time when investor sentiment is already fragile,” Oanda senior market analyst Craig Erlam wrote in a note.

“For someone so obsessed with stock market performance, he’s taking a big gamble with these tariffs, the benefits of which are questionable.”

U.S. Commerce Secretary Wilbur Ross played down the fears saying “hysteria over tariffs is a lot to do over nothing.”

The move however comes at a time when markets are already on edge over rising U.S. interest rates and bond yields.

“We’ve had tariffs put in place for aluminum and steel before, the market always finds a place through it,” said Michael Mattioli, portfolio manager at Manulife Asset Management.

“What would be more concerning is, if it’s going to be broad-based and not just steel and aluminum, but something to do with China or intellectual property.”

At 10:51 a.m. ET, the Dow (DJI) was down 1.2 percent at 24,312.68. The S&P 500 (SPX) fell 0.63 percent to 2,660.9 and the Nasdaq Composite (IXIC) dropped 0.49 percent to 7,145.05.

World stocks also tumbled on Friday, with investors flocking towards traditional safe havens including Japan’s yen and gold.

J.C. Penney Co Inc (N:JCP) shares plunged 8.7 percent after the department store chain missed same store sales estimates.

Foot Locker (N:FL) shares were down 16 percent after the footwear retailer posted disappointing quarterly results.

Declining issues outnumbered advancers on the NYSE by 1,979 to 767. On the Nasdaq, 1,579 issues fell and 1,155 advanced.

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