Dow Sells Off as US and China Trade Tensions Escalate
New York (June 19) U.S. stocks fell sharply on Tuesday, June 19, and global stocks were hit hard after Donald Trump threatened to unleash a fresh round of tariffs on $200 billion worth of goods from China in the latest escalation of trade war rhetoric between the world's two biggest economies.
Trump said a 10% levy would apply "after the legal process is complete" if China "refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced," a reference to Beijing's intent to match a list of $50 billion worth of goods now subject to tariffs from Washington. China called Trump's latest salvo "blackmail" and said trade wars would harm "not just the people of China and the U.S. but all over the world."
The Dow Jones Industrial Average declined 394 points, or 1.6%, to 24,592, the S&P 500 fell 0.96% and the Nasdaq tumbled 1.1%.
Leading the Dow lower were DowDuPont Inc. (DWDP) , Caterpillar Inc. (CAT) and Boeing Co. (BA) .
The Trump administration has told Apple Inc. (AAPL) CEO Tim Cook that it wouldn't place tariffs on iPhones, which are assembled in China, The New York Times reported, citing a person familiar with the talks.
Cook visited Trump last month to warn him that tough talk on China could threaten Apple's position in the country. Apple is worried China could retaliate in ways that hurt its business, according to three people close to Apple, the Times reported.
Apple has sold more iPhones in China than it has in the U.S. for the past three years and relies on mainland Chinese sales for around 20% of its nearly $200 billion in annual revenue.
Shares of Apple were down 2.2% on Tuesday.
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Verizon Communications Inc. (VZ) rose 1.5% after shares of the telecommunications giant were upgraded to buy from hold at Deutsche Bank.
GameStop Corp. (GME) was up 1.4% on Tuesday after jumping 9% on Monday following a report it might be selling itself off to a private-equity firm.
Colgate-Palmolive Co. (CL) rose 1.3% after it announced an authorization to buy back $5 billion of its stock.
Roche Holding AG will pay $2.4 billion, or $137 a share, to buy the shares it doesn't already own in Foundation Medicine Inc. (FMI) . Foundation Medicine rose 28.4% to $136.65.
Earnings reports are scheduled for after the closing bell on Tuesday from FedEx Corp. (FDX) , Oracle Corp. (ORCL) and La-Z-Boy Inc. (LZB) .
U.S. housing starts in May rose 5%, for an annual rate of 1.35 million, higher than estimates of 1.31 million.
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