WASHINGTON—Stocks dropped Monday as technology companies came under fire and fears grew about a trade war with China.

It was a broad sell-off: The Dow Jones industrial average plunged more than 700 points, or 3 per cent, in afternoon trading. The Standard & Poor’s 500-stock index was down 3.2 per cent and the tech-heavy Nasdaq Composite was down 3.5 per cent as volatility continues to rock markets.

All three indexes are negative for the year and are in correction territory. A correction is generally considered a 10 per cent drop from its peak.

Eight of the 11 stock sectors are on pace to close in correction territory Monday. Energy was leading the downhill march, followed by consumer staples, financial services, industrials and information technology.

In Canada, the Toronto Stock Exchange’s S&P/TSX composite index was also down. By mid afternoon it had fallen 195 points, or 1.3 per cent.

China’s government said on Sunday that it would immediately impose tariffs on 128 U.S. commodities it imports in retaliation for U.S. President Donald Trump’s levies on steel and aluminum. The tax on U.S. goods could span pork, soybeans and fruit as well as aircraft.

The fears of an impending trade war have rocked markets since last month when Trump announced 25 per cent tariffs on steel and 10 per cent on aluminum that the U.S. imports.

The United States buys little Chinese steel and aluminum, but analysts said Beijing was certain to retaliate, partly to show its toughness ahead of possible bigger disputes.

Chinese officials have said Beijing is willing to negotiate, but in a confrontation will “fight to the end.”

“China has already prepared for the worst,” said Liu Yuanchun, executive dean of the National Academy of Development Strategy at Renmin University in Beijing. “The two sides, therefore, should sit down and negotiate.”

The dispute reflects the clash between Trump’s promise to narrow the U.S. trade surplus with China — a record $375.2 billion last year — and Beijing’s ambitious plans to develop Chinese industry and technology.

Monday’s tariff increase will hit American farm states, many of which voted for Trump in 2016.

American farm exports to China in 2017 totalled nearly $20 billion, including $1.1 billion of pork products.

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In a Monday note to clients, Jason Pride, chief investment officer for private clients at Glenmede Wealth Management, cited festering trade war fears as a driver in the market’s volatility.

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“The Trump administration’s announcements on trade sanctions in total so far encompass a relatively small portion of overall U.S. trade,” according to Pride’s note. “However, this could only be the beginning, as the Trump administration ponders the extension of further sanctions on the Chinese trade relationship.”

Troubles for technology companies are another factor. Markets were dragged down Monday by the president’s Twitter assault on Amazon.com, in which he knocked the retailers relationship with the U.S. Postal Service. The retail giant’s stock was down nearly 5 per cent.

“I guess as long as there is uncertainty around global trade, markets will be on edge,” said Charlie Ripley, investment strategist with Allianz Investment Management. “A lot of this today is being driven by technology. Trump had some unfavourable comments on Amazon and the Post Office, and that is helping drive down the tech sector.”

Shares of computer-chip giant Intel were on pace for one of their worst days in years on a Bloomberg report that Apple may take its chip manufacturing in-house.

Shares of Silicon Valley darling Tesla were off 5.7 percent following questions about its self-driving technology system known as Autopilot. The company said Friday, after the markets closed, that a recent fatal crash of one of its cars involved an activated Autopilot. In an unusual move, the National Transportation Safety Board investigating the crash publicly said on Sunday that it was “unhappy” with Tesla’s public discussion of the accident.

Also on Sunday, Tesla’s founder and CEO took to Twitter to play an April Fool’s day prank, joking that “Telsa has gone completely and totally bankrupt.” Tesla’s share value has slumped 18 percent in the past five trading days.

The Nasdaq is close to losing all its gains for 2018. That is a surprising reversal for the technology industry, which had spearheaded much of the gains of the bull market.

Facebook came under heavy fire from lawmakers last month in the United States and Britain after news reports raised questions about whether it allowed third-party developers to access the data of users without their permission — a potential violation of its privacy agreement with the U.S. government.

Facebook also finds itself in a tiff with rival giant Apple. Facebook chief executive Mark Zuckerberg during the weekend responded to Apple chief executive Tim Cook’s criticism of the social-media company’s data crisis. The scandal involved a third-party company, Cambridge Analytica, which harvested personal data on 50 million Facebook users.

Cook criticized Zuckerberg during an interview last week when he was asked what he would do if he were the Facebook chief.

“I wouldn’t be in this situation,” Cook said, adding “We care about the user experience, and we’re not going to traffic in your personal life.”

Zuckerberg responded in an interview with Vox, appearing to criticize Apple’s business model as based on “serving rich people.”

“If you want to build a service that helps connect everyone in the world, then there are a lot of people who can’t afford to pay,” Zuckerberg said, referring to Facebook. “And therefore, as with a lot of media, having an advertising-supported model is the only rational model that can support building this service to reach people. … But if you want to build a service which is not just serving rich people, then you need to have something that people can afford.”

With files from the Associated Press

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