A fresh salvo in the U.S.-China trade war from President Donald Trump roiled financial markets a day after the Federal Reserve delivered the first interest-rate cut in a decade in part to combat the spat’s effects on global growth.

The S&P 500 saw the biggest two-day drop since May, with stocks swinging 2 per cent from gains to losses, after Trump said America will levy a 10 per cent tariff on US$300 billion in Chinese goods starting Sept. 1. After markets closed, the president said the new levies could be raised beyond 25 per cent.

The 10-year Treasury yield dropped to the lowest level since 2016, while two-year rates plunged as much as 18 basis points as traders increased bets on Fed cuts to another half point this year. The yen rose the most in two months versus the dollar, while crude slumped 8 per cent, its worst day in four years.

Lenders led losses on benchmarks with Bank of America falling the most in more than two months. The declines spread across sectors as slumping global industrial company Caterpillar Inc., consumer brand Nike Inc. and tech giant Apple Inc. slammed the Dow Jones Industrial Average. A draft list of US$300 billion worth of targets published by the Trump administration in May included a raft of consumer and technology goods, including most of Apple’s major products such the IPhone, along with toys, footwear and clothing.

“Any way you slice it, escalations of the whole megillah, meaning the additional US$300 billion starting with 10 per cent, means it’s only going to get worse and that’s going to be a defining moment in this trade war where it starts showing up with the consumer,” said Arthur Hogan, chief market strategist at National Securities Corp. “This is not good news for the market. We’re just seeing the beginning of what the market reaction’s going to look like.”

Stocks had been rebounding from Wednesday’s Fed-induced sell-off before Trump put trade back at the center of investor minds. The tariffs come after U.S.-Sino talks earlier in the week ended with no major progress, prompting the American president to push forward with tariffs in addition to the 25 per cent on US$250 billion that has been in place for months.

Here are some of the key events to watch as the week unfolds:

The U.S. July jobs report is due Friday.

Here are the main moves in markets:

Stocks

• The S&P 500 Index fell 0.9 per cent as of 4 p.m. New York time.
• The Stoxx Europe 600 Index rose 0.5 per cent.
• The MSCI Emerging Market Index sank 0.6 per cent.
• The MSCI Asia Pacific Index dropped 0.2 per cent.

Currencies

• The Bloomberg Dollar Spot Index fell 0.2 per cent.
• The euro rose 0.1 per cent at US$1.1086.
• The Japanese yen gained 1.28 per cent to 107.39 per dollar, the biggest rise since May 31.

Bonds

• The yield on 10-year Treasuries fell 12 basis points to 1.89 per cent.
• The two-year rate lost 12 basis points to 1.73 per cent.
• Britain’s 10-year yield fell two basis points to 0.59 per cent.

Commodities

• Gold rose 1.2 per cent to US$1,454.50 an ounce.
• West Texas Intermediate crude decreased 7.9 per cent to US$53.95 a barrel, the biggest decline since February 2015