Stocks fell sharply Monday as a trade war between the world's largest economies intensified with China retaliating against President Donald Trump's latest move.

The Dow Jones Industrial Average plunged 767.27 points, or 2.9%, to close at 25,717.74 and dropped as much as 961.63 points at one point. The S&P 500 dropped nearly 3% to 2,844.74. The Nasdaq Composite lagged, falling 3.5% to 7,726.04. It was the worst percentage drop for all three indexes this year. The S&P 500 is now more than 6% below its record hit only last month.

The Nasdaq fell for a sixth straight session, its longest losing streak since late 2016. The S&P 500 also posted a six-day losing streak. The Dow declined for a fifth straight day. The move continues a sell-off that began last week when President Donald Trump ordered new tariffs on the rest of Chinese goods and the Federal Reserve failed to signal it would be as aggressive as the market hoped in backstopping the economic slowdown.

Apple led the decline in stocks that have the most to lose from the new round of tariffs, losing 5.2%. The SPDR S&P Retail ETF (XRT) closed 2.2% lower as the new tariffs will hit items apparel, electronics and toys. Nike dropped 2.7%. Macy's and Best Buy pulled back 3.1% and 3.5%, respectively.

FedEx dropped 4%. Caterpillar and Boeing dropped 2.3% and 2.5%, respectively. Semiconductor stocks such as Micron Technology, Skyworks Solutions and Advanced Micro Devices fell at least 4.4%.

"Now we have a trade situation that is going off the rails as the side effects multiply due to the ramping up of the use of tariffs and we are only further apart from any resolution with the Chinese," said Peter Boockvar, chief investment officer at Bleakley Advisory Group. "The policy of using tariffs as a tool to address our legitimate beefs with the Chinese has failed miserably."

China, which has historically controlled its currency, the yuan, allowed it to fall to its lowest level on Monday against the dollar in more than a decade. The onshore yuan broke above 7 per U.S. dollar and traded around 7.05.

Trump later accused China of manipulating its currency, saying in a tweet: "This is a major violation which will greatly weaken China over time."

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