Dow sinks 328 points as fears of trade war spread to technology

The anxiety of the Wall Street commercial war extends to technology.

Technology stocks suffered their worst day in more than two months on Monday after reports that President Donald Trump plans to crack down on Chinese investments in big tech in the United States.

Nasdaq fell 2.1%. Leading chip makers, including Nvidia (NVDA), Advanced micro systems (AMD) and Marvell (MRVL) plummeted by more than 4% each.

Even the technological stars of this year have fallen sharply. Netflix (NFLX) plunged more than 6%, while Twitter (tWTR) and Amazon (AMZN) lost more than 3%.

The Dow Jones lost 328 points, or 1.3%, and lost nearly 500 points at one point.

"The biggest tax implied by the tariffs is the uncertainty: everyone freezes," said David Kelly, chief strategist at JPMorgan Funds.

Kelly said the United States is now working on "trade disputes on several fronts," and the inability to reach resolutions could lead to "a constant conflict for potentially future years."

Until recently, the tech industry had been mostly spared commercial worries on Wall Street. The Nasdaq has reached a record level as recently as last week.

Technology sales followed reports that Trump plans to restrict Chinese investment in "industrially significant technology".

A person familiar with the plans told CNN on Monday that the measures would include rules that would prohibit companies owning at least 25 percent of Chinese ownership shares from buying companies involved in technologies deemed important by the White House.

Stocks recovered some of their losses late in the day after White House commercial advisor Peter Navarro expressed doubts about the reports and called the sale an exaggerated response.

"It is not planned to impose investment restrictions on countries that interfere in any way whatsoever with our country, this is not the plan", did he told CNBC. "So, all this idea that there will be investment restrictions in the world, please, spread that out."

Related: Chinese technology investment is the next target in the Trump crackdown

Still, investors worry that Trump's showdown on trade with China and other countries could derail the recovery of the US economy by undermining business confidence.

Bank of America warned on Friday in a report that supply chain disruptions and loss of confidence could create a "trade shock" that would lead to a "pure recession". While the company said the odds of a "full-fledged trade war" are low, the risks are "rising."

Kelly, of JPMorgan, said do not worry about a recession this year. However, he said "we know that if you add uncertainty to the environment, it will slow down the economy."

Federal Reserve Chairman Jerome Powell said last week that the central bank was hearing for the first time companies complaining about the investment, hiring and decision-making postponed due commercial concerns. "It's a new thing," Powell said.

Harley Davidson (PORK) provided concrete evidence of the impact of Donald Trump's commercial program. The motorcycle maker told shareholders that it could lose up to $ 100 million a year because of retaliatory tariffs from the European Union.

The losses of the Dow Jones have brought the territory closer to the correction, a 10% drop from previous highs. The Dow fell into correction once earlier this year.

– CNN's Jethro Mullen and Kevin Liptak contributed to this report.

CNNMoney (New York) First published on June 25, 2018: 12:31 ET