Stocks around the world slide as trade war worsens

NEW YORK (AP) — Stocks tanked again today on worries about how much President Donald Trump's worsening trade war will damage the economy, and the S&P 500 was headed for its worst drop since late last year, when the market was wrapped in the throes of recession fears.

China let its currency, the yuan, drop to its lowest level against the dollar in more than a decade, a move Trump railed against as "currency manipulation." It followed his own tweets last week that threatened tariffs on about $300 billion of Chinese goods, which would extend tariffs across almost all Chinese imports.

The escalations in the trade war between the world's largest economies are rattling investors already unnerved about a slowing global economy, falling U.S. corporate profits and possibly too-weak inflation.

"The Great China Trade Deal evaporated before our eyes last week and investors should stop hoping it back into existence," Christopher Smart, head of the Barings Investments Institute, wrote in a report.

Losses were steep and worldwide as the sell-off that began today in Asia swept westward through Europe to the Americas. Investors in search of safety herded into U.S. government bonds, which sent yields plunging lower.

The yield on the 10-year Treasury note, which rises with expectations of stronger economic growth and inflation, fell to its lowest level since Trump's 2016 election energized markets, down to 1.73 percent from 1.85 percent late Friday.

The S&P 500 lost 2.8 percent as of 2 p.m. Eastern time, and was on track for its worst day since December, when markets tumbled on worries that the economy was headed for a recession because of the trade war and a Federal Reserve that had raised interest rates too quickly. The Dow Jones Industrial Average fell 744 points, or 2.8 percent to 25,740, and the Nasdaq composite dropped 3.4 percent.

Of course, the U.S. economy is still growing, the unemployment rate remains close to its healthiest level in nearly half a century and U.S. stock indexes set record highs just over a week ago. But the escalating trade tensions and disappointment that the Federal Reserve has not committed to a lengthy series of interest-rate cuts have sent the S&P 500 on a losing streak set to hit its sixth day, which would be its longest since October. The S&P 500 is 5.8 percent below its record.