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

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

Traders work on the floor of the New York Stock Exchange. (AP Photo/Mark Lennihan)

NEW YORK: Wall Street stocks plunged on Monday (May 13) 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 617.38 points, or 2.38 per cent.

The broad-based S&P fell 69.53 points (2.41 per cent) to 2,811.87, while the tech-rich Nasdaq Composite Index tumbled 269.92 points (3.41 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 Jun 1, striking back after the latest moves by Washington to lift 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 on 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.

Source: AFP/de

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