Here Are 3 Hot Things to Know About Stocks Right Now
- Stocks ended sharply lower Monday after China said it would increase tariffs on as much as $60 billion worth of U.S. imports to as high as 25%.
- Apple (AAPL) - Get Report shares tumbled 5% as investors worried about the impact of China's tariffs on the tech giant.
- Teva Pharmaceuticals (TEVA) - Get Report slumped after attorneys general from more than 40 states charged the company with conspiring to artificially inflate and manipulate drug prices.
Wall Street Overview
Stocks fell sharply Monday, logging their steepest declines since early January after China said it would increase tariffs on as much as $60 billion worth of U.S. imports to as high as 25% in response to last week's collapse of trade talks between the world's two largest economies.
China said the tariff increase on around 5,000 product groups will take effect on June 1. The U.S. last week raised tariffs on $200 billion of China-made imports to 25%.
The Dow Jones Industrial Average fell 617 points, or 2.4%, to 25,325. The S&P 500 lost off 2.41%, and the Nasdaq fell 3.4%. It was the S&P 500's worst day since Jan. 3. when it fell 2.48%.
"The recent escalation in U.S.-China trade tensions is taking a worsening toll on stocks as rising retaliatory tariffs risk sparking a full-blown trade war," Alec Young, managing director of global markets research, FTSE Russell. "Investors are increasingly worried an anticipated second-half profit rebound may now evaporate as President Trump's threat to tariff the remaining $325 billion in Chinese imports would disproportionately target consumer products like iPhones, thereby posing a greater threat to the consumption-driven U.S. economy."
President Donald Trump tweeted that China "will be hurt very badly if you don't make a deal because companies will be forced to leave China for other countries. Too expensive to buy in China. You had a great deal, almost completed, & you backed out!"
Trump confirmed on Monday that he plans to meet with Chinese President Xi Jinping and Russian President president Vladimir Putin at the G-20 summit in Japan in late June, CNBC reported.
"We have the right to do another $325 billion" in tariffs applied to Chinese goods, Trump said, but he added, "I have not made that decision yet."
China's ambassador has invited U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin to Beijing. Mnuchin told CNBC the two countries are "still in negotiations."
"Friday's rally, which was triggered by comments from Treasury Secretary Mnuchin that the recent talks were 'constructive,' reversed this morning, as news broke on China retaliatory tariffs of 25% on $60 billion worth of goods," said Cliff Hodge, director of investments for Cornerstone Wealth. "So, far the selloff has been orderly and is removing some of the froth in equity markets. We are somewhat concerned by the action in fixed income markets. The 3 month - 10 Year segment of the yield curve inverted again, and high-yield spreads expanded some last week. Investors should keep any eye on yields and the U.S. dollar for clues on the future direction of the market. If the DXY breaks higher, the reflation trade orchestrated by central banks will be at risk."
Apple (AAPL) - Get Report shares fell $11.46, or 5.8% to $185.72 as investors worried that fresh tariffs on China-made imports into the United States will either raise price or depress earnings for the world's biggest tech company.
Shares of Boeing (BA) - Get Report led the Dow's fall, dropping $17.23, or 5%, to $337.44 after the editor of the Chinese newspaper Global Times speculated that the country may single out the aircraft maker in the trade war with the U.S.
Separately, the Supreme Court ruled 5-4 to allow a class-action suit against Apple claiming that its App Store represents an unlawful monopoly to proceed.
Deere (DE) - Get Report was also feeling the impact of the trade war, as shares fell 6% to $146.32. Analysts at R.W. Baird downgraded the company's stock to neutral from outperform, noting that large agricultural equipment demand is increasingly at risk in a trade war.
Teva Pharmaceuticals (TEVA) - Get Report fell 15% to $12.23 after attorneys general from more than 40 states alleged the nation's largest generic drugmakers conspired to artificially inflate and manipulate prices for more than 100 different generic drugs.
Insys Therapeutics (INSY) shares fell 74% to 95 cents after the company said that it is considering filing for bankruptcy protection due to the financial burden from litigation tied to its role in perpetuating the opioid crisis in the United States.