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)
Copyright (c) 2019 Dow Jones & Company, Inc.
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