Stocks fell sharply to start the week after President Trump urged China not to retaliate to a U.S. tariff hike last week and China retaliated anyway. On Monday morning, or Monday evening Beijing time, Trump said on Twitter: "China should not retaliate-will only get worse!" He added in tweets: "I say openly to President Xi & all of my many friends in China 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." Within an hour or so of Trump's tweets, China said that it will increase tariffs to 10%, 20% or 25% for most of the $60B worth of U.S. products on which it currently imposes levies of 5% or 10%, starting June 1. Trump, who last week threatened to impose tariffs on $325B more worth of Chinese products, said today that he hasn't made a decision about whether to proceed with that additional action. He also confirmed that he plans to meet with Chinese President Xi Jinping next month at the G20 summit, while Treasury Secretary Steve Mnuchin told CNBC that China talks are ongoing, leaving some hope that the trade fight has a path forward despite today's escalations.
ECONOMIC EVENTS: In trade news, U.S. President Donald Trump said that he will be meeting with China's Xi Jinping and Russia's Vladimir Putin at the G20 meeting and added, according to Reuters, that he has not made a decision yet on whether to add tariffs on $325B more in goods imported from China. Meanwhile, Bloomberg reported that Trump warned China against "substantial" retaliation for new U.S. tariffs after the country announced it will be raising tariffs on $60B worth of goods that already have duties levied against them.
TOP NEWS: Shares of Boeing (BA) dropped 4.9% 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.
Apple (AAPL) shares fell 5.8% after the China news and after the Supreme Court issued its opinion that iPhone owners were direct purchasers who may sue Apple for alleged monopolization.
Shares of Teva (TEVA) plunged 14.9% 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."
Meanwhle, Twitter (TWTR) said in a blog post that it found and fixed a bug that was collecting and sharing iOS location data. In other social media news, Facebook (FB) was in focus after it announced that it was raising minimum wages for U.S. contract workers to $20 an hour.
MAJOR MOVERS: Among the noteworthy gainers were a number of defensive stocks. The top 10 gainers on the S&P 500 were gold miner Newmont Mining (NEM) and nine companies that were either utilities or REITS. Also higher was Jumia Technologies (JMIA), which rose 8.6% after the company's first report as a public company, which it had accelerated following a short report last week by Citron Research, prompted Stifel analyst Scott Devitt to upgrade the stock to Buy.
Among the notable losers was Endo (ENDP), which slid 19.2% 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 10.9% in its second day of trading after its lackluster IPO on Friday.
INDEXES: The Dow fell 617.38, or 2.38%, to 25,324.99, the Nasdaq lost 269.92, or 3.41%, to 7,647.02, and the S&P 500 declined 69.53, or 2.41%, to 2,811.87.