US: Dow ends down 2.4% as new China tariffs batter Wall Street

[NEW YORK] Wall Street stocks plunged Monday after China announced new tariff measures on the United States, reviving fears the months-long conflict could deteriorate further.

The Dow Jones Industrial ended at 25,324.99, down more than 615 points, or 2.4 per cent.

The broad-based S&P also fell 2.4 per cent to 2,811.87, while the tech-rich Nasdaq Composite Index tumbled 3.4 per cent to 7,647.02.

The battering left the Dow at its lowest close in more than three months and amounted to the Nasdaq's worst day in 2019.

US stocks opened sharply lower and kept falling after Beijing announced it would increase tariffs on US$60 billion worth of US goods from June 1, striking back after the latest moves by Washington to raise tariffs and potentially impose additional levies on Chinese goods soon.

The editor of the party-owned Chinese newspaper Global Times said on Twitter that Beijing was considering additional actions, including dumping US Treasuries, ending US agricultural purchases and reducing orders for Boeing airplanes.

"A US-China trade deal was pretty much priced into the market," said Sam Stovall, chief investment strategist at CFRA Research. "Now who knows what has to be accomplished before a deal can be reached?

"That is causing investors to bail out and say 'I don't know what is going to happen.'"

Boeing plunged 4.9 per cent. A spokesman for the company said Boeing was "confident the US and China will continue trade discussions and come to an agreement that benefits both US and Chinese manufacturers and consumers."

Other US companies with large China operations suffered big declines, including Apple, down 5.8 per cent, Caterpillar, down 4.6 per cent, Deere & Company, down 6.2 per cent and General Motors, down 3.5 per cent.

Apple also was hit by news the US Supreme Court will allow an antitrust lawsuit against the iPhone maker to go forward.

Alan Skrainka of Cornerstone Wealth Management said the selloff was a "tremendous overreaction" given that the portion of goods hit by tariffs is small in the context of the global economy.

"The most likely scenario is that the two sides still reach agreement," he said. "There is significant upside potential."

Uber Technologies shed 10.8 per cent in its second trading session after faltering Friday in a market debut and closing below its initial public offering price.

Generic drug companies Mylan and Teva Pharmaceuticals sank 9.4 per cent and 14.8 per cent respectively after they were listed among defendants in a lawsuit by 44 states asserting a conspiracy to fix prices.

AFP