Stocks have started the week sharply lower as trade tensions between the U.S. and China have escalated further. President Donald Trump said in a series of tweets that "China will be hurt very badly," predicting that companies will be forced to leave China, and accusing the country of having "backed out" of a "great deal" that was "almost completed." In response to tariff hikes enacted at the end of last week by the U.S., China announced plans to set its own new tariffs of between 5% and 25% on $60B of U.S. imports, impacting around 5,000 products, starting on June 1.
ECONOMIC EVENTS: In the U.S., no economic data of note was reported.
TOP NEWS: Shares of Boeing (BA) dropped in morning trading amid speculation China may reduce orders amid the escalating trade war with the United States. Hu Xijin, editor-in-chief of the Global Times, said in a tweet that China may stop purchasing U.S. agricultural products and energy, reduce Boeing orders and restrict U.S. service trade with China in retaliation against the recent imposition of higher tariffs on imported Chinese goods. Other companies that generate a large percentage of their sales from China, such as Apple (AAPL), Caterpillar (CAT), Tiffany (TIF) and Tapestry (TPR), have also been notably weak.
Apple shares are facing another headwind aside from the China news, as the Supreme Court issued its opinion that iPhone owners were direct purchasers who may sue Apple for alleged monopolization. Previously, four iPhone owners sued Apple, alleging that the company has unlawfully monopolized the aftermarket for iPhone apps.
Shares of Teva (TEVA) plunged 16% after Connecticut Attorney General William Tong led a 44-state coalition in announcing a lawsuit against the company and 19 other drug makers alleging a "broad conspiracy to artificially inflate and manipulate prices, reduce competition and unreasonably restrain trade for more than 100 different generic drugs." The complaint alleges that Teva, Novartis' (NVS) Sandoz unit, Mylan (MYL), Pfizer (PFE) and 16 other generic drug manufacturers, including Amneal Pharmaceuticals (AMRX), Dr. Reddy's (RDY) and Lannett (LCI), "engaged in a broad, coordinated and systematic campaign to conspire with each other to fix prices, allocate markets and rig bids for more than 100 different generic drugs." Shares of Mylan were also down 9% near noon following news of the suit and a related 60 Minutes feature that aired on Sunday night.
MAJOR MOVERS: Among the noteworthy gainers was Maxar Technologies (MAXR), which rose 8% after it adopted a tax benefit preservation plan for net operating losses.
Also higher was Gogo (GOGO), which gained 2% after Roth Capital analyst Scott Searle started coverage of the stock with a Buy rating and a $10 price target.
Among the notable losers was Endo (ENDP), which slid 18% after JPMorgan analyst Chris Schott downgraded the stock to Underweight from Neutral with an unchanged price target of $9.
Also lower was Uber (UBER), which fell over 10% in its second day of trading after its lackluster IPO on Friday.
INDEXES: Near midday,
the Dow was down 632.75, or 2.44%, to 25,309.62
, the Nasdaq was down 263.27, or 3.33%, to 7,653.67
, and the S&P 500 was down 71.62, or 2.49%, to 2,809.78.