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* China to impose tariffs on $60 bln worth of U.S. goods
* S&P 500, Nasdaq set for biggest percentage drop of the
year
* Tariff-sensitive tech, industrials hit hardest
* Uber falls for second day after underwhelming IPO
* Indexes drop: Dow 2.57%, S&P 2.54%, Nasdaq 3.3%
(Updates to late afternoon, changes dateline, byline)
By Stephen Culp
NEW YORK, May 13 (Reuters) - Wall Street took a pounding on
Monday after China defied Washington by announcing retaliatory
tariffs on $60 billion in U.S. goods in the latest salvo in the
two countries' increasingly belligerent trade dispute, sending
investors fleeing equities for less risky assets.
The widespread sell-off pulled all three major U.S. indexes
significantly lower, with the S&P 500 and the Nasdaq set to show
their biggest one-day percentage drops of the year and the Dow
on track for its largest percentage drop since Jan 3.
China said it would impose higher tariffs on various U.S.
goods despite President Trump's warnings not to retaliate
against tariffs on $200 billion of Chinese imports announced by
the White House on Friday. The move stoked fears of
a global economic downturn.
"With the ultimate trade outcome inherently uncertain and
difficult to model or predict, investors are selling first and
asking questions later," said Alec Young, managing director of
Global Markets Research at FTSE Russell in New York.
Michael O'Rourke, chief market strategist at JonesTrading in
Greenwich, Connecticut, agreed.
"The market is starting to realize the situation is as bad
as it could be," O'Rourke said. "There's a lot of risk here."
Investors responded to that perceived risk by fleeing
equities for safe-haven assets.
U.S. Treasury yields fell to six-week lows, with 10-year
yields falling below those of 3-month bills, an inversion seen
by many as a potential harbinger of recession.
Gold prices rose to a one-month high. The CBOE Volatility index .VIX , a gauge of investor
anxiety, looked set for its biggest daily point gain so far this
year.
The Dow Jones Industrial Average .DJI fell 665.92 points,
or 2.57%, to 25,276.45, the S&P 500 .SPX lost 73.25 points, or
2.54%, to 2,808.15 and the Nasdaq Composite .IXIC dropped
261.17 points, or 3.3%, to 7,655.77.
Of the 11 major sectors of the S&P 500, all but utilities
.SPLRCU were in the red, with the largest percentage declines
coming from trade-sensitive tech .SPLRCT and industrials
.SPLRCI .
Among stocks especially vulnerable to U.S.-China tariffs,
Boeing Co BA.N slid 4.6% and Caterpillar Inc CAT.N fell 5.2%
while the Philadelphia Chip index .SOX was down 4.7%, setting
a course for its biggest percentage drop since Jan. 3 and
extending last week's 6% decline. Shares of Apple Inc AAPL.O sank 5.6% on the double-whammy
of heightened trade tensions and a decision by the U.S. Supreme
Court to allow an antitrust suit against the company for
monopolizing the iPhone app market. Uber Technologies Inc UBER.N extended its slide, falling
11.0% on its second day as a public company following Friday's
underwhelming debut. Ride-hailing peer Lyft Inc LYFT.O as also down, dropping
6.8%.
Shares of Tesla Inc TSLA.O fell 5.3%, on track to close at
their lowest in more than two years. First quarter reporting season is in the home stretch, and
of the 451 companies in the S&P 500 that have posted results,
75.2% have come in above expectations.
Analysts now see an S&P 500 earnings increase 1.3% for the
Jan-March period, significantly better than the 2% decrease
expected on April 1.
Declining issues outnumbered advancing ones on the NYSE by a
5.50-to-1 ratio; on the Nasdaq, a 6.06-to-1 ratio favored
decliners.
The S&P 500 posted 10 new 52-week highs and 22 new lows; the
Nasdaq Composite recorded 23 new highs and 143 new lows.