US stock markets drop as tech companies lead losses

US stock markets dropped sharply on Monday as big technology companies led losses, and fears over an escalating trade war with China rattled investors. The Dow Jones Industrial Average briefly fell 500 points, ending the day down 396 points (1.56%).

Apple, Microsoft and Amazon, the most valuable companies on the market, sustained some of the worst losses. Apple dropped close to 4% on renewed worries that iPhone sales could slow and Amazon lost 5%. Facebook dropped 5.7% as the company continued to struggle with issues related to its reaction to the discovery of manipulation of its platform.

The arrest of Nissan chairman Carlos Ghosn on charges he underreported his income and misused company funds caused the company’s shares to tumble and shocked many in Japan who view him as something of a hero. US-traded shares of Nissan lost 5.8%, while Renault shares dropped 8.4% in Paris. In Asia, the Shanghai Composite Index fell 1% to 2,675.69 and Tokyo’s Nikkei 225 lost 0.9% to 21,633.54. Hong Kong’s Hang Seng retreated 1.3% to 26,023.02 and Seoul’s Kospi shed 0.7% to 2,086.50.

In Japan, chief cabinet secretary Yoshihide Suga said on Tuesday the government was watching for economic fallout from the scandal at one of the world’s biggest vehicle manufacturers.

The so-called Faang companies (Facebook, Apple, Amazon, Netflix and Google) whose rises helped drive stock markets to record highs have all suffered sharp losses in recent weeks. Each is down more than 20% from its year high – technically known as a bear market.

“I’ve been looking for them to show some leadership which they fail to do, and until we get the tech leadership I think equities are going to continue to struggle,” said Peter Cecchini, the managing director at Cantor Fitzgerald in New York.

The jittery trading came after two days of gains last week as investors hoped that the US and China were moving closer to settling their costly trade fight, which has been a major uncertainty for investors. Those hopes faded after the two countries clashed at a Pacific Rim summit over the weekend.

A steep loss for Boeing, a major exporter which would stand to suffer greatly in a protracted trade war, also weighed heavily on the Dow.

The S&P 500 index fell 44 points, or 1.6% while the tech-heavy Nasdaq lost 2.7%.

The disagreements between the US and China at the Asia-Pacific Economic Cooperation meeting left investors pessimistic about the prospects for a deal that would end trade tensions between the world’s two largest economies. For the first time in almost 30 years, leaders at the summit could not agree on a joint declaration on world trade.

Talks between the US and China are continuing ahead of a meeting between Xi Jinping, the Chinese president, and Donald Trump planned for the G20 summit later this month.