Published: Wed, May 15, 2019
Finance | By Loren Pratt

U.S. stocks plummet on concerns over growth, earnings prospects

U.S. stocks plummet on concerns over growth, earnings prospects

In Asia, the Shanghai Composite index fell 1.2%.

As U.S. and Chinese negotiations met in Washington last week, Trump announced that he was raising tariffs from 10% to 25% on $200 billion worth of Chinese goods. And on Monday, China announced retaliatory tariffs against the USA, hitting $60 billion in annual exports to China with new or expanded duties that will reach 25 percent. The sell-off accelerated on Monday after China announced plans for retaliatory tariffs. Chipmakers were among the biggest decliners. Investor confidence that the two sides were close to a resolution had helped push the market to its best yearly start in decades.

However, while there is a lot of fear about an all-out trade war, which could batter the world economy, both said talks will continue, though no date has been set for the next round.

The tariff escalation has rattled global markets, even as Trump said he would meet with Chinese President Xi Jinping next month.

Investors are losing faith that a U.S.

The Dow lost 2.4% to 25,324.99, at one point dropping 719 points. Apple and Boeing were the Dow's biggest decliners.

Shares in the ride-sharing app dropped further below the $45 price they began trading at on Friday when the company made its stock market debut.

The broader S&P 500 index fell 2.4%, to 2,811.87, while the Nasdaq, which is heavily weighted with technology stocks, slid 3.4% to 7,647.02.

Coca-Cola shares bubbled up 1.33% on Tuesday after analysts at Morgan Stanley turned bullish on the stock, while Ralph Lauren closed 3.69% softer despite posting a first-quarter sales and profits beat.

China said it would impose higher tariffs on $60 billion in United States goods despite President Donald Trump's warnings not to retaliate against additional tariffs on Chinese imports announced by the White House on Friday.

The new tariffs largely affect business equipment, but they also apply to $40 billion in consumer products like air conditioners, furniture, clothing and spark plugs.

The announcement from the finance ministry in Beijing comes days after the United States raised tariffs on some Chinese imports as talks to resolved a trade fight between the countries faltered. U.S. soybean futures fell to their lowest in a decade on Monday. They were trading around $9 a bushel last month and are now at their lowest price since December 2008.

A stumbling block has been US insistence on an enforcement mechanism with penalties to ensure Beijing carries out its commitments.

Uber's shares rose another 6.4 per cent in after-the bell trading after a U.S. labour agency said it had concluded that the company's drivers were independent contractors, not employees.

Bond prices fell. The yield on the 10 year Treasury edged up to 2.41%.

Energy futures recovered, with US crude gaining 18 cents to $61.22 per barrel in electronic trading on the New York Mercantile Exchange.

The June crude contract was up 74 cents at US$61.78 per barrel and the June natural gas contract was up 3.8 cents at US$2.66 per mmBTU. Brent crude, the global standard, picked up $1.08 to $71.31 per barrel.

The safe-haven yen lost ground as the mood improved, with the dollar strengthening 0.4% against the Japanese currency to 109.67.

Natural gas rose 4 cents to $2.66 per 1,000 cubic feet, heating oil rose 2 cents to $2.06 per gallon and wholesale gasoline rose a penny to $1.98 per gallon.

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