NEW YORK (AP) — Stocks are falling sharply and bond prices are climbing after the Trump administration moved to place tariffs on some goods imported from China and restrict Chinese investment. The Chinese government said it will defend itself and investors fear that trade tensions will spike between the world's largest economies. Industrial and technology companies took some of the worst losses while banks dipped along with interest rates. Stock indexes in Europe also took sharp losses.

KEEPING SCORE: The S&P 500 index skidded 41 points, or 1.5 percent, to 2,670 as of 2:35 p.m. Eastern time. The Dow Jones industrial average sank 423 points, or 1.7 percent, to 24,258. The Nasdaq composite gave up 103 points, or 1.4 percent, to 7,241. The Russell 2000 index of smaller-company stocks lost 15 points, or 1 percent, to 1,563.

Stocks took bigger losses before the details of the sanctions were announced. The Dow fell as much as 506 points in midday trading.

TRADE WORRIES: The Trump administration will impose restrictions on Chinese investment and tariffs on some $48 billion worth of Chinese imports. China's Commerce Ministry said the country will defend its interests.

Construction equipment maker Caterpillar fell $5.64, or 3.6 percent, to $150.16 and aerospace company Boeing slid $10.35, or 3.1 percent, to $326.75. Investors also sold some of the market's biggest winners. Among technology companies, Facebook fell $2.88, or 1.7 percent, to $166.51 and Alphabet, Google's parent company, fell $31.83, or 2.9 percent, to $1,062.17. Online retailer Amazon slid $24.06, or 1.5 percent, to $1,557.80.

Earlier this month the Trump administration ordered tariffs on imported steel and aluminum, and stocks dropped as investors worried about the possibility of tougher restrictions on international trade and smaller profits for corporations.

Their fears eased when the administration said some countries will be exempt from the tariffs. That continued Thursday, as U.S. Trade Representative Robert Lighthizer said the tariffs won't apply to the European Union, Canada, Mexico, Argentina, Brazil and Australia.

THE QUOTE: Peter Donisanu, an investment strategy analyst for the Wells Fargo Investment Institute, said the events of the last few weeks show the Trump administration isn't hostile to trade necessarily, but wants to get other countries to revise the terms of America's trade deals.

"This is probably intended to get China to get more serious in discussions around violations of intellectual property rights and addressing those issues," he said.

Donisanu said the risk of a damaging trade war is still low because the Trump administration is targeting specific goods that aren't central to China's economy. That could change if it puts tariffs on electronics or appliances imported from China.

"If the Trump administration really wanted to hurt China and start a trade war, then they would go after those larger sectors," he said.

OVERSEAS REACTION: Germany's DAX lost 1.7 percent and the CAC 40 in France shed 1.4 percent. Britain's FTSE 100 dropped 1.2 percent. Hong Kong's Hang Seng dropped 1.1 percent. The Nikkei 225 in Japan index gained 1 percent and the South Korean Kospi added 0.4 percent.

BONDS: Bond prices climbed, sending yields lower. The yield on the 10-year Treasury note slipped to 2.83 percent from 2.88 percent. When yields and interest rate decrease, banks make smaller profits on loans. Bank of America lost $1, or 3.1 percent, to $30.87 and JPMorgan Chase gave up $3.15, or 2.7 percent, to $111.59.

Utility companies and real estate investment trusts moved higher. When bond yields decline, investors often those stocks and others that pay big dividends.

The decline in rates comes a day after the Federal Reserve raised interest rates and said the U.S. economy and the job market continued to improve over the last two months. The Fed expects to raise rates three times this year, although some investors think a fourth increase is possible. The Fed also said it might raise rates three more times next year instead of two.

ABBVIE TUMBLES: AbbVie plunged after it reported disappointing results from a study of its cancer therapy Rova-T. AbbVie canceled its plans to ask for faster approval of Rova-T as a treatment for small cell lung cancer, but other studies are continuing. AbbVie shed $13.51, or 12 percent, to $98.94. Other health care stocks also sank. Johnson & Johnson fell $2.44, or 1.9 percent, to $128.75 and Amgen declined $3.62, or 2 percent, to $177.97.

ENERGY: Benchmark U.S. crude shed 87 cents, or 1.3 percent, to $64.30 a barrel in New York. Brent crude, used to price international oils, fell 56 cents, or 0.8 percent, to $68.91 a barrel in London.

Wholesale gasoline remained at $2.01 a gallon. Heating oil lost 1 cent to $1.99 a gallon. Natural gas lost 3 cents to $2.62 per 1,000 cubic feet.

METALS: Gold edged up $5.90 to $1,327.40 an ounce. Silver fell 3 cents to $16.39 an ounce. Copper lost 4 cents to $3.02 a pound.

CURRENCIES: The dollar fell to 105.64 yen from 106.10 yen. The euro rose to $1.2312 from $1.2332.

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AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP . His work can be found at https://apnews.com/search/marley%20jay