(Reuters) - Wall Street’s main indexes were set to open lower on Thursday، as investors feared that the U.S.-China trade spat could spiral into a technology cold war between the two countries، with no signs of resolution in sight.
Beijing said Washington needs to correct its “wrong actions” for trade talks to continue after the United States blacklisted Huawei Technology Co Ltd last week.
Although the Trump administration temporarily eased curbs on the Chinese telecoms gear maker، tensions again mounted on Wednesday following reports that the United States was considering sanctions on Chinese video surveillance firm Hikvision.
Investors now fret that tit-for-tat tariffs and other retaliatory actions by the world’s two largest economies will hold back global growth، especially hitting the high-growth technology sector.
Apple Inc shares fell 1.6% in premarket trading، while those of chipmakers، which have a higher revenue exposure to China، also declined. Intel Corp، Micron Technology Inc and Qualcomm Inc slipped between 1.3% and 2.7%
Trade-sensitive industrial bellwether Boeing Co slipped 1.9% and Caterpillar Inc dropped 1.3%.
“It has moved into a broader trade war. Initially، it was about tariffs and retaliation، now you’re talking about banning companies and it’s not looking good in the near-term،” said Scott Brown، chief economist at Raymond James in St. Petersburg، Florida.
“If you look at the U.S. economy a lot of the growth in earnings comes from what’s happening overseas. Now we see that’s not been helpful and as the domestic economy slows more than expected، that also could have a negative impact.”
Data from the eurozone added to the downbeat tone. A private survey showed business growth accelerating at a slower-than-expected pace this month، weighed down by a deepening contraction in the bloc’s manufacturing industry.
A report due later is expected to show Markit’s purchasing managers survey of U.S. manufacturing activity edged down to 52.5 in May from 52.6 in the previous month.
At 8:40 a.m. ET، Dow e-minis were down 226 points، or 0.88%. S&P 500 e-minis were down 23 points، or 0.8% and Nasdaq 100 e-minis were down 80.5 points، or 1.08%.
The prolonged U.S.-China trade war has rattled financial markets، knocking the benchmark S&P 500 index 3.4% off its record high hit on May 1. The index is now on track to post its worst monthly decline of the year.
Investors on Wednesday largely shrugged off the release of minutes from the Federal Reserve’s latest policy meeting، in which officials agreed that their patient approach to setting monetary policy could remain in place “for some time.”
Retail earnings were mixed. L Brands Inc jumped 9.3% after the retailer reported better-than-expected quarterly earnings، helped by sales in its Bath & Body Works business.
Best Buy Co Inc climbed 2.2% after the consumer electronics retailer forecast second-quarter sales and profit above estimates.
Hormel Foods Corp declined 4.4% after the packaged meat producer cut its full-year earnings forecast.