By Anora M. Gaudiano and Barbara Kollmeyer, MarketWatch

Stock benchmarks on track for worst weekly losses since early February

U.S. stocks turned decidedly lower on Friday with the main benchmarks extending losses from the previous session even after President Donald Trump signed a sweeping $1.3 trillion bill funding the government until October.

Earlier Trump threatened to veto (http://www.marketwatch.com/story/congress-rushes-to-approve-13-trillion-spending-bill-and-avoid-shutdown-2018-03-23) the spending bill, charging that it didn't include provisions for a border wall.

The stock market has mostly been under pressure as investors wrestled with the prospect of a global trade war as China fired its first retaliatory salvo against tariffs on at least $50 billion of Chinese goods announced by the Trump administration.

What are the main benchmarks doing?

The Dow Jones Industrial Average dropped 302 points, 1.2%, to 23,669, weighed by declines in shares of 3M Co. (MMM) and Goldman Sachs Group Inc.(GS).

The S&P 500 index slumped 39 points, or 1.5%, to 2,604, with all of the 11 main sectors trading lower. Financials, off 2.1%, and technology stocks, down 1.6%, led decliners.

The benchmark index is about 3 percentage points below where it was on the day Trump signed the tax bill into a law in late December.

The Nasdaq Composite Index declined 125 points, or 1.8%, to 7,040.

With one session left to wrap up this week, the main benchmarks are each down about 5% for the week. That would mark the worst week for those indexes since the week ending Feb. 9, when markets were routed amid concerns over rising inflation and bond yields (http://www.marketwatch.com/story/dow-poised-to-edge-up-as-traders-lick-their-wounds-after-a-punishing-stretch-2018-02-08).

The Cboe Volatility Index rose 7% to 24.90, above its long-term average of 20.

What's driving markets?

Trump said that he signed the spending bill, "as a matter of a national security," adding there are "a lot of things I'm unhappy about in this bill." Trump criticized Congress for passing the spending package without leaving enough time to read the plan before funding expires at the end of the day.

Earlier, China reacted to Trump administration's plans to impose tariffs (http://www.marketwatch.com/story/trumps-china-tariffs-a-fight-for-control-over-robots-wireless-other-future-technologies-2018-03-22), as Beijing's commerce ministry fired back with tariffs against $3 billion in U.S. goods (http://www.marketwatch.com/story/china-plans-3-billion-in-retaliatory-tariffs-against-us-goods-2018-03-22).

China stopped short of penalties on the biggest pawns in a potential trade war, leaving off soybeans, sorghum and Boeing aircraft, indicating Beijing may be looking for leverage in any negotiations with the U.S.

The White House late Thursday formally approved tariff reprieves for the European Union (http://www.marketwatch.com/story/eu-plus-six-other-nations-get-temporary-us-tariff-reprieve-2018-03-23) plus six other nations, including Canada and Mexico.

Read:Here's why the stock market took the China tariffs so hard (http://www.marketwatch.com/story/heres-why-the-stock-market-took-the-china-tariffs-so-hard-2018-03-22)

Read:Trump, Xi enter rockier phase as U.S.-China trade fight heats up (http://www.marketwatch.com/story/trump-xi-set-to-undergo-rockier-phase-as-trade-fight-heats-up-2018-03-22)

What are the data showing?

Durable-goods orders (http://www.marketwatch.com/story/durable-goods-orders-snap-back-with-31-gain-as-business-investment-surges-2018-03-23)jumped 3.1% in February, largely reversing a big drop at the start of the year and posting the largest gain since last summer.

Sales of newly constructed homes (http://www.marketwatch.com/story/new-home-sales-chug-higher-in-february-2018-03-23)were little changed in February, with a 0.6% decline compared with the previous month. January's tally was raised substantially. The February selling pace was 0.5% higher than a year ago at a 618,000 seasonally adjusted annual pace.

Atlanta Fed President Raphael Bostic said he is likely to support more interest-rate hikes this year (http://www.marketwatch.com/story/bostic-says-he-is-likely-to-support-more-rate-hikes-this-year-2018-03-23), saying there are upside risks to both GDP and employment as well as building, if still modest, inflation pressures.

What are strategists saying?

"There was plenty of good news this morning: durable goods and the signing of the spending bill, but investors could not shake off uncertainty created by Trump administration when it comes to trade with China," said Erin Browne, head of asset allocation at UBS Asset Management.

"Investor may also be concerned about weakening dollar in an environment when inflation is rising," Browne said.

Browne said positioning and a run-up in financials and technology stocks may have been prompting investors to flee these sectors now.

"Investors had been long financials and technology stocks since December and with higher interest rates, the unwind is hitting these sectors the most," Browne said.

Read:'I don't think this is a trade war,' says veteran Wall Street strategist (http://www.marketwatch.com/story/i-dont-think-this-is-a-trade-war-says-veteran-wall-street-strategist-2018-03-23)

What stocks are in focus?

Micron Technology Inc.(MU) shares fell 7.3% after the company posted an earnings beat late Thursday, but also announced plans to spend money building out its fabrication sites.

Read:Micron bets that memory demand is here to stay (http://www.marketwatch.com/story/micron-bets-that-memory-demand-is-here-to-stay-2018-03-22)

Dropbox Inc. made its debut on Friday (http://www.marketwatch.com/story/dropboxs-stock-soars-in-its-debut-to-push-market-cap-above-10-billion-2018-03-23), with the stock soaring more than 36%. The company priced its initial public offering at $21 a share late Thursday.

Nike Inc.(NKE) shares gained by 0.6% after the shoe-and-apparel company posted a beat on sales (http://www.marketwatch.com/story/nike-swings-to-loss-but-sales-beat-expectations-shares-rise-2018-03-22) even though it swung to a fiscal third-quarter loss.

Read:Nike CEO says company has 'deep leadership bench' after reshuffle (http://www.marketwatch.com/story/nike-has-deep-leadership-bench-says-ceo-2018-03-23)

Shares of Kroger Co.(KR) and Target Corp(TGT) shot higher after reports that the two companies are in merger talks. Although, CNBC has raised questions (https://www.cnbc.com/2018/03/23/shares-of-target-and-kroger-jump-on-report-of-possible-merger-talks.html) about the likelihood of such a hookup. Shares of Kroger were up 0.4%, while those for Target were 0.9% lower.

What are other markets doing?

The ICE U.S. Dollar Index fell 0.4%, with the dollar hitting its worst levels against the Japanese yen since the election of President Trump.

Gold prices (http://www.marketwatch.com/story/gold-rallies-as-investors-seek-shelter-from-global-trade-tensions-2018-03-23) ended at $1,349.90 an ounce--the highest finish since Feb. 16.

European equities finished weaker across the board, and Asian markets also suffered losses (http://www.marketwatch.com/story/asian-markets-strengthen-after-fed-raises-rates-2018-03-21).

Oil futures (http://www.marketwatch.com/story/oil-tips-higher-on-fresh-sign-for-continued-opec-production-curbs-2018-03-23) rose 1.9% to $65.54 a barrel on more indications that OPEC could maintain production curbs into 2019.

(END) Dow Jones Newswires

March 23, 2018 15:36 ET (19:36 GMT)