By Alisha Haridasani
Political uncertainty in Europe and a White House decision to proceed with tariffs against China dragged major U.S. indices down on Tuesday.
“It’s kind of been the one-two punch and the bears are taking advantage,” said Daniel Ives, chief strategy officer and head of technology research at GBH Insights.
The Dow Jones closed down almost 400 points and the S&P 500 slid by more than 1 percent after earlier sell-offs around the world.
European markets faltered as anxiety mounted in Italy, where Reuters reported voters may head back to the polls in July after parties failed again to form a governing coalition, and President Sergio Mattarella may dissolve parliament and call for a new vote.
Italy, the bloc’s fourth largest economy and a founding member of the eurozone, hasn’t had a government since national elections in March.
A handful of populist, anti-EU parties won at the polls, but none of them garnered enough seats for an outright majority. The leading Five Star Movement has been unable to cobble together a government with anti-immigrant nationalists.
Investors worried the rising eurosceptic sentiment and political turmoil in Italy could spill over to other European Union countries and further erode the institution that has united most of the continent for more than 60 years.
“There’s hypersensitivity here to what’s happening in Europe,” Ives said.
As Europe fretted over Italy's political future, the Trump administration announced Tuesday it will move forward with 25 percent tariffs on $50 billion worth of Chinese imports, a move that rattled the markets and surprised China. The White House said the tariffs would apply to goods "containing industrially significant technology,” and a list of specific imports will be released next month.
The administration’s decision to spurn Chinese imports comes more than a week after Treasury Secretary Steve Mnuchin said a trade war between the world’s largest economies was “on hold” while negotiations continued.
“We feel surprised by the tactical statement issued by the White House, and yet it was also unsurprising,” a Chinese official reportedly said Tuesday in a statement carried by the official Xinhua news agency.
For the full interview, click here.