Stocks suffered losses from the outset, joining other markets around the world in a global selloff sparked by disappointing flash PMIs for May as well as tough talks from both sides in the trade fight being waged by the U.S. and China. While Treasury Secretary Mnuchin warned that proposed tariffs on a further $300B worth of Chinese imports could still be coming, the Washington Post said that China "has signaled through various channels" that it won’t conduct further trade negotiations until Huawei issues are resolved. The trade jitters not only hit stocks but oil as well, with WTI prices sliding 6% and energy being the worst performing sector in the S&P 500.
ECONOMIC EVENTS: In the U.S., initial jobless claims slipped 1,000 to 211,000 in the week ended May 18. Markit's flash manufacturing index fell to 50.6 in May from 52.6 in April, hitting its worst level since September 2009. New home sales dropped 6.9% to a 673,000 rate in April
In Europe, the Eurozone manufacturing flash PMI for May came in at 47.7, below the consensus estimate of 48.1 and down from 47.9 in April. The services flash in Europe also missed, dropping to 52.5 from 52.8 in April. Separate data also showed that German business confidence has fallen to a four-year low.
In Asia, Japan's flash manufacturing PMI for May fell to 49.6 from 50.2 in April.
TOP NEWS: Best Buy (BBY) reported better than expected first quarter sales and earnings, but shares fell 4.9% amid the broader market selloff. Best Buy CFO and soon-to-be CEO Corie Barry said the company's reiterated FY20 outlook "balances our better-than-expected Q1 earnings, the fact that it is early in the year and our best estimate of the impact associated with the recent increase in tariffs on goods imported from China," specifically the increase in tariffs from 10% to 25% on the products on the $200B List 3 that originally went into effect last September.
Apple (AAPL) is sometimes viewed as a proxy for the state of the relationship between the U.S. and China and with tensions ratcheting up the iPhone maker's shares were 1.7% lower. South China Morning Post reported, citing sources, that a growing number of people in China are switching from Apple smartphones to Huawei devices following the U.S. export ban on Huawei in a show of nationalist sentiment.
In a report posted on its website, Facebook (FB) said it estimates that fake accounts represented approximately 5% of its worldwide monthly active users during Q1 of 2019 and Q4 of 2018. The social media giant added that it removed 2.2B fake accounts in the first three months of 2019.
Avon Products (AVP) shares rose 3.1% after Natura & Co announced that it is acquiring Avon in an all-share transaction. Based on closing prices on May 21, the transaction values Avon at an enterprise value of $3.7B and the combined group would have an enterprise value of approximately $11B.
Meanwhile, shares of Maxar Technologies (MAXR) surged 27.7% after NASA selected the company to develop and demonstrate power, propulsion and communications capabilities for NASA's lunar Gateway. The contract award includes an indefinite-delivery/indefinite-quantity portion and carries a maximum total value of $375M.
In addition, the Wall Street Journal reported that Blackstone (BX) and Prologis (PLD) are separately vying to acquire the U.S. business of Singapore's GLP in a transaction that could be worth over $20B.
MAJOR MOVERS: Among the noteworthy gainers was L Brands (LB), which rose 12.8% after it reported better than expected results for the first quarter and raised the low end of its fiscal 2019 EPS view. Also higher was Genesee & Wyoming (GWR), which gained 9.2% after Bloomberg reported that Blackstone, Brookfield (BAM), Stonepeak and EQT are among bidders vying for the railroad company.
Among the notable losers were Bloomin' Brands (BLMN) and Chipotle (CMG), which tumbled a respective 9.7% and 5.5% after BMO Capital analyst Andrew Strelzik downgraded both stocks to Underperform, citing concerns about the impact of the Chinese outbreak of African swine fever on pork prices. Also lower was NetApp (NTAP), which fell 8.1% after reporting quarterly results.
INDEXES: The Dow fell 286.14, or 1.11%, to 25,490.47, the Nasdaq lost 122.56, or 1.58%, to 7,628.28, and the S&P 500 declined 34.03, or 1.19%, to 2,822.24.