Dow Jones closes down more than 400 points as Wall Street ends worst week in two years

President Trump brushes off fears over trade war that has sparked the fall

The Dow has dropped more than 1,100 points in two days ( Drew Angerer/Getty Images)

The Dow Jones industrial average has closed more than 400 points down, with rising fears over a trade war between the US and China wiping more than 1,100 points off the index in the last two days.

The fall meant that Wall Street ended its worst week since January 2016, with all three major indexes suffering tumbles. The Dow lost 424 points, or 1.8 per cent, to 23,533, bringing its weekly decline to 1,400 points. The S&P 500 fell 55 points, or 2.1 per cent, to 2,588. The Nasdaq fell 174 points, or 2.4 per cent, to 6,992.

Technology companies and banks sustained some of the biggest losses on the Dow - Applied Materials lost 5.9 per cent and Bank of America fell 4.5 per cent as investors worry that an escalating spat between Washington and Beijing will hurt US businesses, especially those that do a lot of sales overseas.

The large falls for the Dow came after President Donald Trump unveiled a plan on Thursday to impose up to $60bn in new tariffs on Chinese goods, as well as limiting the country's investment in the US as payback for what his administration alleges is years of intellectual property theft.

Just before signing the trade action, Mr Trump said it was “the first of many” - as he looks to correct what has repeatedly called “unfair” trade deals with nations around the world.

Asked earlier on Friday about the stock market falls, Mr Trump said that he was not concerned that the tariffs would be a drag on the stock market and add that “China is going to end up treating us fairly.” In terms of the up to $60bn in new tariffs, Beijing has so far only suggested it will defend itself.

China announced a $3 billion list of US goods that could see additional tariffs on Friday Morning. The Commerce Ministry said higher duties on pork, apples, steel pipe and other goods would offset Chinese losses due to Mr Trump's tariff hike on steel and aluminium imports which the president announced at the start of the month.

Beijing also criticised Mr Trump over the announcement of the $60bn in tariffs, as it said it would not back down in the face of the new measures. It gave no indication of its possible response but a foreign ministry spokeswoman said China was “fully prepared to defend” its interests.

“We don't want a trade war, but we are not afraid of it,” said spokeswoman, Hua Chunying.

Associated Press contributed to this report