By Chris Matthews and Barbara Kollmeyer, MarketWatch

U.S. officials vow higher China tariffs will kick in by Friday; Vice Chairman Liu He expected to attend negotiations this week in Washington

U.S. stocks fell at the start of trade Tuesday, following Monday's losses after U.S. officials confirmed that tariffs on imported goods from China could be raised by the end of the week.

How are benchmark indexes faring?

The Dow Jones Industrial Average fell 211 points, or 0.8%, to 26,232, while the S&P 500 index dropped 24 points, or 0.8%, to 2,909. The Nasdaq Composite Index fell 66 points, or 0.8%, to 8,057.

U.S. stocks finished lower on Monday (http://www.marketwatch.com/story/us-stock-futures-sink-as-threat-of-full-blown-trade-war-re-emerges-2019-05-06), but recouped deeper losses. The Dow slid 66.47 points, or 0.3%, to 26,438.48 after being down more than 470 points earlier in the session. The S&P 500 index declined 0.5% to 2,932.47, while the Nasdaq retreated 0.5%, to 8,123.29 after touching a Monday low near the open at 7,981.85.

What's driving markets?

U.S. Trade Representative Robert Lighthizer said Monday that the Trump administration will increase tariffs (http://www.marketwatch.com/story/lighthizer-accuses-china-of-reneging-on-promises-says-tariffs-will-rise-friday-2019-05-06) on $200 billion in Chinese goods early Friday. The prospect of higher tariffs had been first raised on Sunday by President Donald Trump, rattling investors who had anticipated that better progress toward a near-term resolution between the two superpowers.

Read:With Trump threatening to tighten the trade screws, here's a look at what tariffs have done so far (http://www.marketwatch.com/story/with-trump-threatening-to-tighten-the-trade-screws-heres-a-look-at-what-tariffs-have-done-so-far-2019-05-06)

In a briefing, Treasury Secretary Steven Mnuchin, along with Lighthizer, told reporters that the U.S. administration was made aware over the weekend that China was trying to back away from "some of the language" that had been hammered out in prior talks.

U.S. officials said that tariffs on those Chinese goods will rise from 10% to 20% at 12:01 a.m. Eastern time Friday, and markets will likely be monitoring China for further reaction.

The Wall Street Journal reported early Tuesday (https://www.wsj.com/articles/china-says-vice-premier-liu-he-to-visit-u-s-thursday-friday-11557211757?mod=searchresults&page=1&pos=2)that China's Commerce Ministry said on Tuesday that Vice Premier Liu He will visit Washington to continue trade talks on Thursday and Friday.

Chinese investors appeared to take the latest developments in stride, while buyers in so-called haven securities nudged the value of assets perceived as safe slightly lower.

Despite the trade worries, markets managed a powerful rebound on Monday, clawing back from steep declines early in the session in apparent response to Trump's tweets about increase China import levies.

What stocks are in focus?

Shares of Anadarko Petroleum Crop. (APC) could be in focus Tuesday, after the company said Monday evening that a $38 million bid by Occidental Petroleum Corp. (OXY) was superior to a previously accepted by Chevron Crop. (CVX) Stifel Nicolaus, downgraded Anadarko to hold from buy, while raising its price target to $7 from $68.

Shares of Allergan Plc. (AGN) fell 2.3%, even after the pharmaceutical company reported first-quarter earnings (http://www.marketwatch.com/story/allergan-stock-down-05-despite-earnings-and-revenue-beat-2019-05-07) that surpassed Wall Street expectations.

Aramark(ARMK) stock tumbled 12% Tuesday, after the facilities-management company reported first-quarter profits and sales (http://www.marketwatch.com/story/aramark-misses-earnings-expectations-2019-05-07) that fell short of analyst expectations.

Shares of Tesla Inc. (TSLA) are in focus after the company announced late Monday that Chief Executive Elon Musk spent $25 million to buy more shares in the electric car maker, to increase his stake in the company to nearly 20%.

Crocs, Inc. (CROX) stock rose more than 8.2% Tuesday morning, after the footwear manufacturer reported first-quarter earnings and revenue that beat expectations.

Shares of GW Pharmaceuticals PLC(GWPH) rallied 7% in premarket action, after the company reported positive phase-three trial results and narrowing losses on Wednesday evening (http://www.marketwatch.com/story/gw-pharmaceuticals-stock-rises-after-earnings-2019-05-06). Shares rose further after Oppenheimer upgraded the stock (http://www.marketwatch.com/story/gw-pharma-shares-soar-9-premarket-as-oppenheimer-upgrades-to-outperform-2019-05-07) to outperform, while J.P. Morgan and Stifel Nicolaus also raise their price targets on the stock.

What are analysts saying?

"The overriding concern here is that Trump has single-handedly halted the recent recovery in risk appetite by potentially derailing trade talks," said Jasper Lawler, head of research at London Capital Group, in a note to traders.

Lawler said traders were "placated" by news that Chinese delegates would still arrive in Washington this week for talks, but skeptical the two sides can work out the latest fracture by the Friday deadline. "This means markets probably need to see the Friday deadline for raising U.S. tariffs on Chinese goods pushed back to avoid another selloff," he said.

What's on the economic calendar?

Investors will get an update on the number of job openings, along with the rate at which Americans are leaving their jobs in March, at 10 a.m. Eastern Time. At 11:30 a.m., Randal Quarles, Vice Chairman of the Federal Reserve Board of Governors will give a speech. At 3 p.m., the Fed will release its estimate of consumer credit growth.

How are other markets trading?

In Asia (http://www.marketwatch.com/story/asian-markets-mixed-as-traders-weigh-us-china-trade-dispute-2019-05-06), the Shanghai Composite Index reversed a small lose to close up 0.6%, while the Nikkei 225 , back from an extended holiday break, fell 1.5%. European stocks were mostly lower (http://www.marketwatch.com/story/europe-markets-sinking-again-on-trade-war-escalation-2019-05-07), with the FTSE 100 index down 0.6% as investors returned from a holiday and played catch up to Monday's losses on the continent.

Gold was down slightly (http://www.marketwatch.com/story/gold-lower-finds-little-traction-despite-trade-induced-stock-retreat-2019-05-07), while the U.S. Dollar Index edged higher, and crude oil (http://www.marketwatch.com/story/oil-prices-retreat-as-us-china-trade-spat-sparks-demand-concerns-2019-05-07) dropped.

 

(END) Dow Jones Newswires

May 07, 2019 09:47 ET (13:47 GMT)

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