An escalating trade dispute between the United States and other leading economies battered stocks on Monday, handing the S&P 500 and Nasdaq their steepest losses in more than two months. The Dow Jones Industrial Average ended the session below its 200-day moving average for the first time since June 2016.

The S&P 500 lost ground on reports that the Treasury Department was drafting curbs that would block firms with at least 25 percent Chinese ownership from buying our domestic tech firms.

Treasury Secretary Steven Mnuchin later said in a message on Twitter that restrictions would apply, not specifically to China, but “to all countries that are trying to steal our technology.”

However, Wall Street’s major indexes only pared losses after White House trade adviser Peter Navarro indicated a softer stance on investment restrictions in a CNBC interview.

Losses were widespread, but technology stocks suffered the most, with the tech-heavy Nasdaq chalking up a 2.1 percent loss. The S&P technology index fell 2.3 percent, its largest one-day decline in more than two months. The Philadelphia Semiconductor index dropped 3.1 percent as shares of chipmakers, which derive much of their revenue from China, took a hit.

Harley-Davidson indicated it would move production of motorcycles shipped to the European Union to its international facilities. It forecast that EU tariffs would cost the company $90 million to $100 million a year. Harley-Davidson fell 6.0 percent by the close on Monday.

The iconic motorcycle company’s announcement raised concern that escalating trade threats could lead to similar moves from other companies and dampen U.S. economic growth.

The CBOE Volatility index rose to its highest level in nearly a month.

The FANG stocks, which have led Wall Street’s momentum, were lower after having hit record intraday highs last week. Facebook fell 2.7 percent, Amazon dropped 3.1 percent, Netflix was down 6.5 percent, and Alphabet fell 2.6 percent.

Campbell Soup was the best percentage gainer on the S&P 500, rising 9.4 percent after a New York Post report that Kraft Heinz Co was considering buying the company.

Approximately 7.74 billion shares changed hands on the major domestic equity exchanges, as compared to the 7.32 billion share average over the past 20 trading days.

New Home Sales Rebound

According to a Commerce Department report released Monday morning, sales of new single-family homes increased more than expected during May, as sales in the South surged to their highest level in nearly 11 years.

According to the report, new home sales rose 6.7 percent to a seasonally adjusted annual rate of 689,000 units last month, the highest level since November 2017. April’s sales pace was revised down to 646,000 units from the previously reported 662,000 units.

Last month’s surge in new home sales unwound April’s decline. New home sales make up 11 percent of all housing market sales, rising only 0.7 percent to a pace of 667,000 units in May.

Sales in the South, which accounts for many of the of transactions, rebounded 17.9 percent to a rate of 409,000 units in May, the highest level since July 2007. The increase ended two straight months of declines.

Sales fell 10.0 percent in the Northeast and were down 8.7 percent in the West. They were unchanged in the Midwest.

New home sales are drawn from permits and tend to be volatile on a month-to-month basis. They increased 14.1 percent from a year ago. New home sales are getting a boost from an inventory crunch in the market for previously owned houses.

A report last week showed existing home sales falling for a second straight month in May.

Supply has lagged strong demand for housing, which is being driven by a robust labor market, leading to a sharp increase in home prices.

The 30-year fixed mortgage rate averaged 4.57 percent last week and is up more than 50 basis points this year. Further increases are likely after the Federal Reserve raised interest rates earlier this month for a second time this year and forecast two more rate hikes by the end of the year.

The median new house price fell 3.3 percent to $313,000 in May from a year ago. That was the lowest price in a year. The drop in new home prices is expected to be temporary.

There were 299,000 new homes on the market in May, up 1.0 percent from April. Supply is just over half of what it was at the peak of the housing market boom in 2006.

Builders are dealing with higher lumber prices as well as labor and land shortages. A survey last week showed confidence among single-family homebuilders dipped in June, with builders “increasingly concerned that tariffs placed on Canadian lumber and other imported products are hurting housing affordability.”

The Trump administration in April 2017 imposed anti-subsidy duties on imports of Canadian softwood lumber.

Residential investment contracted in the first quarter and it is likely that housing will again subtract from gross domestic product in the second quarter.

The housing market is lagging overall economic growth, which appears to have regained speed in the second quarter after slowing at the start of the year. Growth estimates for the April-June period are as high as a 4.7 percent annualized rate. The economy grew at a 2.2 percent pace in the first quarter.

At May’s sales pace it would take 5.2 months to clear the supply of houses on the market, down from 5.5 months in April. Nearly two-thirds of the houses sold last month were either under construction or yet to be built.

Goldman Sachs Says Domestic Oil Drama Trumps OPEC’s Vienna Chaos

The most dramatic events in the oil market last week occurred in North America as opposed to OPEC’s get-together in Europe, according to Goldman Sachs Group Inc.

The bank says the outage of an oil-sands facility in Canada could lead to a shortage in North America for all of July and shrink stockpiles at the main U.S. storage hub in Cushing, Oklahoma. That’ll support American oil prices while a deal in Vienna between OPEC and its allies to boost output — led by Saudi Arabia — may weigh on Europe’s Brent crude, Goldman Sachs wrote in a June 24 report.

According to Goldman, with the global market pricing to pull crude out of the U.S., this loss of our domestic supplies will exacerbate the current global deficit, making the increase in OPEC production required.

And while Saudi is already ramping up exports, these will not be delivered until August with June stock draws already accelerating.

Saudi Energy Minister Khalid Al-Falih on Saturday signaled a real supply gain approaching 1 million barrels a day after OPEC adopted a pact aimed at lifting output on Friday. He was seeking to reassure the market after several cartel members said the actual increase will only reach 700,000 because some nations are incapable of pumping more.

Brent crude, the benchmark for more than half the world’s oil, fell as much as $1.81 to $73.74 a barrel on Monday after Saudi Arabia’s pledge over the weekend to boost output, following an ambiguous OPEC pact and contradictory statements from other nations on Friday.

In contrast, U.S. West Texas Intermediate (WTI) crude was up 29 cents at $68.87 a barrel on Monday. Stockpiles at Cushing have slumped for five weeks with the start of the summer driving season when demand peaks.

An outage at Syncrude Canada’s oil-sands facility may lead to a 360,000 barrel-a-day shortage for all of July, which could spur a further draw down in inventories at the U.S. hub, Goldman said. The spread between the European and American markers narrowed 18 percent Monday and has almost halved in under a week. U.S. crude’s discount to Middle East benchmark Dubai oil shrank to the smallest since May 16.

While the bank kept its summer forecast for Brent crude unchanged at $82.50 a barrel, it says prices will sequentially decline to $75 by year-end. However, Goldman warned against positioning for the move lower right away, given the current market deficit and low inventories.

A recent pick up in outages from Libya to Nigeria and Canada, as well as growing risks that output in Iran — which is being targeted by the U.S. with sanctions — falls more than expected may challenge OPEC spare capacity, the bank said.

Saudi Arabia and Russia initially proposed raising output after curbs by OPEC and its allies since last year helped eliminate a global glut and boosted Brent crude to $80 a barrel for the first time since 2014.

Even if output were increased aggressively, the group’s announcement doesn’t threaten “to create a large reversal in fundamentals,” Goldman said. Even under this scenario, which would require an unprecedented increase in core-OPEC and Russia production and would leave the market with little remaining spare capacity, the bank says it expects only a slim surplus.