Stocks Sell Off on Monday After China Threatens Tax Retaliation

The Dow Jones Industrial Average closed at 25,324.99 on Monday with a loss of 617.38 points or -2.38%. The S&P 500 closed at 2,811.87 for a loss of 69.53 points or -2.41%. The Nasdaq Composite closed at 7,647.02 for a loss of 269.92 points or -3.41%. The VIX Volatility Index was higher at 20.55 for a gain of 4.51 points or 28.12%.

Monday’s market movers

Stocks sold off sharply on Monday after headlines reported that China plans to retaliate on tariffs. The U.S. increased its tariff rate from 10% to 25% on $200 billion worth of imported Chinese goods on May 10. China says it will institute countermeasures beginning June 1. China has invited U.S. trade officials to Beijing to continue trade negotiations. As of Monday, China has reported plans to increase tariffs on the existing $60 billion of goods which are currently taxed at rates from 5% to 10%.

Treasury prices rallied on Monday in response to the day’s news. The 10-year Treasury note reported the largest gain at 17/32, pushing its yield to 2.407%.

The economic calendar was light on Monday. Economic reports affecting market trading included the following:

• The consumer inflation expectation increased to 2.60% in April from 2.82%.
• The Treasury held auctions for three-month bills at a rate of 2.36% and six-month bills at a rate of 2.355%.

In the Dow Jones Industrial Average, the following stocks led losses:

• Apple (AAPL, Financial) -5.81%
• Boeing (BA, Financial) -4.88%
• Caterpillar (CAT, Financial) -4.60%

Small-cap stocks

In small caps, the Russell 2000 closed at 1,523.00 for a loss of 49.99 points or -3.18%. The S&P 600 closed at 934.68 for a loss of 29.61 points or -3.07%. The Dow Jones Small-Cap Growth TSM Index closed at 9,654.63 for a loss of 331.09 points or -3.32%. The Dow Jones Small-Cap Value TSM Index closed at 9,458.87 for a loss of 237.18 points or -2.45%.

Other notable indexes

Other notable index closes included the S&P 400 Mid-Cap Index at 1,876.57 for a loss of 56.86 points or -2.94%; the S&P 100 at 1,243.47 for a loss of 31.63 points or -2.48%; the Russell 3000 at 1,656.76 for a loss of 43.02 points or -2.53%; the Russell 1000 at 1,557.42 for a loss of 39.63 points or -2.48%; the Wilshire 5000 at 29,041.40 for a loss of 760.20 points or -2.55%; and the Dow Jones U.S. Select Dividend Index at 694.55 for a loss of 12.28 points or 1.74%.

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