The major domestic equity indexes took a hit on Monday after Trump indicated he planned to raise tariffs on Chinese goods. Nonetheless, the indexes finished well off their session lows as some viewed the Administration’s comments as a bargaining tactic and expressed confidence in an eventual trade agreement.
After the closing bell, however, equity index futures took a fresh hit after senior U.S. trade officials said China had reneged on its previous commitments and the tone of negotiations had soured. S&P e-minis were last down 0.60% after resuming trading for the overnight session, a signal that investors expect the market to open lower on Tuesday.
Trade Representative Robert Lighthizer said the Trump administration would “probably” publish a notice on Tuesday about plans to raise tariffs on $200 billion worth of Chinese goods to 25 percent from 10 percent.
The benchmark S&P 500 fell as much as 1.6 percent during the session while Treasury yields fell as investors turned to low-risk government bonds.
Yet, the major indexes recovered much of their losses in afternoon trading on the hope that a trade agreement would soon be reached.
A rise in healthcare shares helped offset the trade-driven losses. The sector received a lift as Centene shares rose 6.6 percent after Reuters reported that two hedge funds have built stakes in the health insurer and are exploring a challenge to its planned acquisition of WellCare Health Plans.
However, materials, industrials and technology shares fell as investors moved away from cyclical and trade-sensitive sectors.
Boeing, the single largest U.S. exporter to China, fell 1.3 percent. Chipmakers, which receive a sizable portion of their revenue from China, were also down. The Philadelphia chip index slid 1.7 percent. Apple ended the trading day down 1.5 percent.
Anadarko Petroleum rose 3.8 percent after Occidental Petroleum increased the cash component of its $38 billion bid, removing a need for any deal to receive the approval of Occidental’s shareholders.
Occidental is trying to convince Anadarko to abandon the agreed-upon $33 billion sale to Chevron. Shares of Chevron rose 1.0 percent.
Approximately 6.45 billion shares changed hands on the major domestic equity exchanges on Monday, as compared to the 6.62 billion share average over the past 20 trading days.