U.S. stocks closed sharply lower Monday, with major indexes seeing their biggest one-day drop in weeks and the Dow bearishly closing below a closely watched level for the first time in two years as fresh threats from President Donald Trump against U.S. trading partners underlined how the risk of protectionist policies has not left the market.

The day’s losses were widespread, with 26 of the Dow’s 30 components ending lower, along with nine of the 11 primary S&P 500 sectors. Tech was the biggest decliner of the day, however, dropping 2.3% in its biggest one-day decline since early April.

What did the benchmarks do?

The Dow Jones Industrial Average DJIA, +0.26% tumbled 328.09 points, or 1.3%, to 24,252.80. The blue-chip average posted its biggest one-day drop since May 29, and it closed at its lowest level since May 4.

The Dow also ended below its 200-day moving average, a closely watched gauge of an asset’s long-term momentum trends. While the Dow has dipped below it on an intraday basis two other times in 2018, it rebounded above it both times; Monday marks the first time it has closed below it since June 2016.

The S&P 500 SPX, +0.40% fell 37.81 points, or 1.4%, to 2,717.07. The benchmark index had its biggest daily decline since April 6, as well as its lowest close since May 31.

While the S&P fell sharply on the day, it closed well off its lows of the session, and it rebounded above its 50-day moving average, which could indicate a level of support going forward.

The Nasdaq Composite Index COMP, +0.63% declined 160.81 points, or 2.1%, to 7,532.01, its biggest one-day percentage loss since April 6. The tech-heavy index struggled amid reports of new efforts to block Chinese investment in and sales to U.S. tech firms.

The Cboe Volatility Index VIX, +0.17% soared 25% to 17.29.

Read:Stock-market leaders yet to be undercut by trade-war fears

What drove markets?

Trade hostilities once again weighed on U.S. stock-market indexes. In a Twitter post Sunday, Trump called on trading partners to remove their “trade barriers and tariffs or be met with more reciprocity by the U.S.”

That tweet may be aimed at the European Union, which on Friday began implementing tariffs on $3.2 billion in U.S. imports. The president responded by threatening 20% tariffs on European cars entering the U.S.

Check out:How Trump’s European auto tariff proposal could backfire

China has also been in the firing line, and by the end of the week, Trump is expected to announce curbs on Chinese investment in U.S. technology firms as well as on tech exports to Beijing. Trump has already threatened more retaliatory levies against Chinese imports, if that country attempts its own tariff response.

On Sunday, the People’s Bank of China said it would reduce the amount of reserves banks are required to keep with the central bank, which would free up more than $100 billion for commercial banks to boost lending and restructure debt.

Signs of a prolonged trade war took a toll on stocks last week, as investors grow increasingly concerned that the global economy could take a hit from those tensions.

Don’t miss:Why a major trade war could mean a ‘full-blown recession’

What did analysts say?

“You can now make the case that we’re in a trade war. The language has gotten bad enough, companies are saying the issue is impacting them, and there’s a sense that the numbers and scope of the issue are ratcheting up,” said Willie Delwiche, investment strategist at Robert W. Baird.

“Investors are shooting first and asking questions later, but I don’t think they’re overreacting, necessarily. Having the Dow close below its 200-day is not a good development. Plus you’re seeing bond yields move down and copper falling recently. Both of those could be a sign that there aren’t just concerns about trade, but also about growth going forward.”

How did other markets perform?

International benchmark Brent oil UK:LCOQ8 settled down 1.1%. On Saturday, Russia said it would back an Organization of the Petroleum Exporting Countries plan put forward by Saudi Arabia to increase global oil production by 1 million barrels a day, starting next month.

Read:U.S. shale companies may benefit from OPEC’s output boost

See:5 things investors need to know about OPEC’s decision to lift oil output

Gold futures US:GCQ8 were modestly lower at $1,270.30 an ounce, though that was enough to push it into the bearish technical pattern of a “death cross.”

European stocks SXXP, -1.02% dropped sharply on trade worries, while Asian markets finished lower for largely the same reason.

The ICE U.S. Dollar Index DXY, -0.01% was slightly lower at 94.369.

What stocks were in focus?

The day’s losses were widespread, but technology stocks were among the most active of the day. Apple Inc. AAPL, +1.80% fell 1.5% while Alphabet Inc. GOOGL, +0.78% ended down 2.6% and Facebook Inc. FB, +0.22% lost 2.7%. Microsoft Corp. MSFT, +1.80% fell 2%.

Semiconductor stocks, as measured by the iShares PHLX Semiconductor ETF SOXX, +1.04% , plunged 2.9%. Shares of Micron Technology Inc. MU, -0.47% lost 6.9% and Advanced Micro Devices Inc. AMD, +1.96% slid about 4.4%.

Industrial stocks were also among the biggest decliners of the day. Boeing Co. BA, -3.59% shed 2.3% and Caterpillar Inc. CAT, +0.58% lost 2.4%.

Shares of Carnival Corp. CCL, -2.44% sank 7.8% after the cruise ship operator beat fiscal second-quarter profit expectations, but cut its full-year outlook.

Rivals Royal Caribbean Cruises Ltd RCL, -2.43% and Norwegian Cruise Line Holding Ltd NCLH, -3.88% also fell sharply, down 5.5% and 6.1% respectively.

Shares of Harley-Davidson Inc. HOG, -1.24% declined by 6% after the motorcycle maker said EU tariffs on the company’s motorcycles increased to 31% from 6%, and will raise the cost of the average motorcycle shipped to the EU from the U.S. by about $2,200.

Education Realty Trust Inc. US:EDR shares rose 1.3% after the owner of college housing communities said it has entered into a definitive merger agreement to be bought by the newly formed Greystar Student Housing Growth and Income Fund LP in an all-cash deal valued at around $4.6 billion, including debt.

TV station operator Gray Television Inc. GTN, +3.39% soared 16% after announcing it has reached an agreement to buy employee-owned local media company Raycom Media Inc. in a deal valued at $3.65 billion, including $100 million of Raycom cash.

Shares of General Electric Co. GE, -0.40% were off 2.3% after a report that the conglomerate is nearing a deal to sell its industrial-engine unit for $3 billion to private-equity firm Advent International. GE also ended its tenure as a Dow component at the end of Monday’s regular session.

Read:China’s Meituan-Dianping files for IPO, seeking valuation of more than $60 billion

Economic reports

The Chicago Fed national activity index for May fell to -0.15 in May from +0.42 in April.

New-home sales ran at a seasonally adjusted annual 689,000 rate in May, beating the consensus estimate of 668,000. The median sales price in May was $313,000, 3.3% lower than a year ago.

Check out:MarketWatch’s Economic Calendar

And:The U.S. economy might hit this milestone for the first time in 11 years if American corporations keeps it up