Wall Street’s major indexes fell on Thursday as trade-sensitive stocks were hit by a new round of tariffs in the trade dispute between the United States and China. Despite ongoing talks, the two countries imposed tariffs on $16 billion worth of each other’s goods.

Shares of Caterpillar and Boeing, which have been bellwethers of trade sentiment, were among the largest strains on the Dow. Caterpillar fell 2.0 percent, and Boeing was down 0.7 percent.

In the S&P 500, the technology sector was the sole gainer, rising 0.2 percent. However, it pared gains late in the session, sending the tech-heavy Nasdaq into negative territory along with the S&P and the Dow.

The energy index fell 0.5 percent and the materials index fell 0.7 percent, the largest percentage drops among the S&P’s major sectors, as prices of crude oil and metals fell due to trade war worries.

The potential political fallout from the legal woes of two former advisers to U.S. President Donald Trump also weighed on investor sentiment.

Data from the U.S. Labor Department indicated the labor market was holding firm despite trade tensions as jobless claims fell for the third straight week.

Investors said they were keeping a close eye on the meeting of the Fed in Jackson Hole, Wyoming, where Federal Reserve Chair Jerome Powell will speak on Friday. His speech will be watched for clues on monetary policy after minutes from the most recent meeting indicated that the Fed would raise interest rates soon.

Shares of Hormel Foods fell after attributing its underwhelming quarterly results to Chinese tariffs, which Hormel said have led to domestic oversupply and lower prices. Hormel shares ended the session down 3.1 percent.

Shares of Victoria’s Secret owner L Brands fell 11.4 percent to reach their lowest level since March 2011 after the retailer cut its full-year profit forecast.

Approximately 5.57 billion shares changed hands on the major domestic equity exchanges, compared to the 6.35 billion share average over the past 20 trading days.

Unemployment Claims Drop – Again

The number of new claims for unemployment insurance fell last week, a sign the labor market was holding firm despite tensions between the United States and its trading partners that have spawned restrictions on global commerce.

According to a report by the Labor Department on Thursday morning, initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 210,000 for the week ended Aug. 18.

It was the third straight week of declines for claims. In July, claims fell to their lowest level since 1969, despite the growth in the workforce.

Labor market strength have been a key reason behind the Federal Reserve’s ongoing campaign to raise interest rates. Minutes of the Fed’s last policy meeting, published on Wednesday, indicated officials discussed raising rates soon to counter excessive economic strength. although policymakers also examined how global trade disputes could batter businesses and households.

The claims data is being closely watched for signs of layoffs as a result of the Trump administration’s protectionist trade policy, which has led to an escalating trade war with China and tit-for-tat import tariffs with trading partners, including the European Union, Canada and Mexico.

While there have been reports of some companies either laying off workers or planning to because of the import duties, that is not yet evident in the claims data.

The Labor Department said data for Maine were estimated in the latest week. The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, dropped 1,750 last week to 213,750.

The claims report also showed the number of people receiving benefits after an initial week of aid dropped 2,000 to 1.73 million for the week ended Aug. 11. The four-week moving average of the so-called continuing claims fell 5,000 to 1.74 million.

Tariffs Ramp Up

The United States and China escalated their acrimonious trade war on Thursday, implementing punitive 25 percent tariffs on $16 billion worth of each other’s goods, even as mid-level officials from both sides resumed talks in Washington.

The world’s two largest economies have now slapped tit-for-tat tariffs on a combined $100 billion of products since early July, with more in the pipeline, adding to risks to global economic growth.

China’s Commerce Ministry said Washington was “remaining obstinate” by implementing the latest tariffs, which kicked-in on both sides as scheduled at 12:01 p.m. in Beijing.

“China resolutely opposes this, and will continue to take necessary countermeasures,” it said in a brief statement, adding that Beijing will file a complaint over the latest tariffs with the World Trade Organization (WTO).

Trump threatened to put duties on almost all of the more than $500 billion of Chinese goods exported to the United States annually unless Beijing agrees to sweeping changes to its intellectual property practices, industrial subsidy programs and tariff structures, and buys more of our goods.

That figure would be far more than China imports from the United States, raising concerns that Beijing could consider other forms of retaliation, such as making life more difficult for American firms in China or allowing its yuan currency to weaken further to support its exporters.

Trump’s administration has been divided over how hard to press Beijing, but the White House appears to believe it is winning the trade war as China’s economy slows and its stock markets tumble.

It is estimated that every $100 billion of imports hit by tariffs would reduce global trade by around 0.5 percent. The resulting impact on China’s economic growth in 2018 of 0.1-0.3 percentage points, and somewhat less for the United States, but the impact will be larger next year, along with collateral damage for other countries and companies tied into China’s global supply chains.

The tariffs took effect amid two days of talks in Washington between mid-level officials from both sides, the first formal negotiations since U.S. Commerce Secretary met with Chinese economic adviser Liu He in Beijing in June.

Trump’s hard line has rattled Beijing and spurred rare criticism within the highest levels of China’s ruling Communist Party over its handling of the trade dispute, sources have said.

Beijing has denied U.S. allegations that it systematically forces the unfair transfer of U.S. technology and has said that it adheres to WTO rules.

The official Xinhua news agency said in a commentary on Thursday that China approached the latest round of talks in good faith, but that Washington remains vague about what it wants.

Washington’s latest tariffs apply to 279 product categories including semiconductors, plastics, chemicals and railway equipment that the Office of the U.S. Trade Representative has said benefit from Beijing’s “Made in China 2025” industrial plan to make China competitive in high-tech industries.

China’s list of 333 U.S. product categories hit with duties includes coal, copper scrap, fuel, steel products, buses and medical equipment.

Though it is too early for trade damage to show up in much economic data as yet, tariffs are beginning to increase costs for consumers and businesses on both sides of the Pacific, forcing companies to adjust their supply chains and pricing, with some U.S. firms looking to decrease their reliance on China.

Jackson Hole Preview

Federal Reserve policymakers broadly agree that interest rates should rise further this year and next, despite Trump’s displeasure with such a plan.

“Based on what I see today, I think two more rate hikes could be appropriate,” along with several more next year as the Fed aims to move interest rates to a neutral setting of about 3 percent, Kansas City Fed Bank President Esther George told Bloomberg TV. The interview was taped on Wednesday, one day before the start of an annual central bankers’ conference in Jackson Hole, Wyoming, which she is hosting.

Dallas Fed President Robert Kaplan, in a CNBC interview later in the day, said he sees three or four rate increases necessary over the next nine to 12 months.

“Expressions of angst about higher interest rates are not unique to this administration,” George told CNBC, using nearly identical language in a separate interview with Fox Business. “We know higher interest rates cause adjustments in the economy.”

Kaplan agreed. “Our job at the Fed is to make decisions on monetary policy and supervision without regard to political considerations or political influence, and I’m confident we’ll continue to do that,” he told CNBC.

Fed Chair Jerome Powell is due to speak Friday at the central banking conference. He is widely expected to signal rate hikes will continue, given 3.9 percent unemployment and inflation that is now near the Fed’s 2-percent target.

The Fed currently targets short-term rates at between 1.75 percent and 2 percent. This is still well short of 2.5 percent to 3 percent, the level at which most Fed officials believe rates would no longer act as a stimulant to economic growth.

George is one of the Fed’s most hawkish policymakers and in the past has consistently advocated a faster path of rate hikes than her colleagues. In the interviews aired Thursday, however, she took care to hedge that view, a possible signal that the Fed is reaching a point where rate-hike policy is less predictable.

Kaplan also signaled he is concerned that fiscal-policy-fueled economic growth will fade next year, making more rate hikes unnecessary, or at least not as obvious.

“We expect economic growth is going to tail off somewhat down to what we call potential,” Kaplan said.

Cook to Become $120 Million Wealthier by Friday

Apple CEO Tim Cook will very likely end the week $120 million wealthier, after maxing out yet another performance bonus.

Barring a major financial collapse in the next 24 hours, Cook will earn 560,000 Apple shares — split evenly between his individual performance as CEO, and for hitting his goal of helping Apple outperform more than two-thirds of companies on the S&P 500.

The S&P 500, on average, earned investors a 44 percent return between August 2015 through Wednesday’s close.

Apple, meanwhile, earned investors a 119 percent return during the same time period, and became the first company to sustain a $1 trillion Wall Street valuation. That’s enough to rank the Cupertino-based giant in the top 81 percent of S&P 500 companies, according to an analysis by Bloomberg.

Apple’s performance compared to its so-called FAANG peers is decidedly middle-of-the-road. Amazon.com and Netflix Inc. gained 267 percent and 192 percent respectively during the same time. Facebook and Alphabet slightly lag, with 90 percent and 85 percent gains, respectively.

Cook’s bonuses tie back to a 2013 agreement where Cook voluntarily tied part of his stock awards to the company’s relative performance on Wall Street, rather than its absolute performance.

Most of Cook’s wealth on paper is tied up in Apple stock awards. He holds some 878,000 shares outright, worth around $188 million. He stands to earn more than half a billion dollars of stock awards if he stays with the company and it continues earning investors outsized returns. This is reportedly Cook’s fifth consecutive time earning his maximum performance bonus.

Cook has previously pledged to donate most of his fortune to charity after his death. Earlier this week, he reportedly gifted $5 million worth of Apple shares to an unnamed charity organization.