U.S. stocks experienced the single worst day of the year thanks to a dramatic sell-off to start the week on Wall Street. The Dow dropped 767 points in the single biggest drop of 2019, while the Nasdaq Composite continued its longest streak of down days since November 2016. The drop was attributed to the growing trade war between the U.S. and China, and China's decision to devalue the yuan.
The Chinese government dropped the yuan under the 7-to-1 ratio with the U.S. dollar for the first time in 10 years, reports CNN. The move stroked fears that a currency war will kick off, or that the U.S.' response will be more tariffs that keep the dispute with China going. Investors believe the Trump administration could devalue the dollar, which would weaken Americans' purchasing power.
President Donald Trump lashed out at China on Twitter, calling the devaluation of the yuan "currency manipulation."
"Based on the historic currency manipulation by China, it is now even more obvious to everyone that Americans are not paying for the Tariffs – they are being paid for compliments of China, and the U.S. is taking in tens of Billions of Dollars!" Trump tweeted early Monday. "China has always used currency manipulation to steal our businesses and factories, hurt our jobs, depress our workers’ wages and harm our farmers’ prices. Not anymore!"
In another tweet, Trump accused China of being "intent on continuing to receive the hundreds of Billions of Dollars they have been taking from the U.S. with unfair trade practices and currency manipulation."
The Dow finished Monday down 2.9 percent, dropping under 26,000 points for the first time since June. Monday marked the fifth consecutive losing day, the longest streak since March.
The Nasdaq Composite, made up of many of the tech companies that could be hurt by the U.S.' standoff with China, fell 3.5 percent. That was the biggest drop since Oct. 24, 2018 and continued the Nasdaq's longest losing streak since November 2017. The S&P 500 also dropped almost 3 percent, making Monday its worst day of the year as well.
Before last week, the global market compartmentalized the U.S.-China trade war, Art Hogan, chief market strategist at National, explained to MarketWatch. According to Hogan, investors thought negotiations would lead to an end and neither side would try to make the dispute continue.
However, on Thursday, Trump announced 10 percenttariffs on $300 billion of imports from China, starting on Sept. 1. In response, China let the yuan drop and told its companies to stop buying American agricultural products.
Capital Economics analysts told CNN that Beijing's decisions likely meant that officials there have "All but abandoned" reaching a trade deal with the U.S.
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