China Tariffs Weigh On Stocks Early, But Indexes Reverse Sharply Higher

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US stocks tumbled into correction mode to start off the second quarter on Monday, as technology shares got battered on worries sparked by trade concerns and tweets by President Trump and Elon Musk.

Amazon fell 5.2 percent following broadsides from Trump on Twitter.

The Dow Jones Industrial Average fell 458.92 points, or 1.9 per cent, to end at 23,644.19 after dipping below its 200-day moving average.

The Dow Jones industrial average closed 389 points higher on Tuesday, rebounding from a 459-point loss on Monday.

The S&P 500 is down 91.73 points, or 3.4 percent. Boeing Co.'s stock (BA) fell 1%, while heavy-machinery maker Deere & Co.(DE) fell 2.9%. "That mixing of issues is contributing to uncertainty", said Kristina Hooper, chief global market strategist at Invesco.

"The fact that a country has actually raised tariffs in retaliation is an important step in the wrong direction", she said.

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Nervous investors are hoping an unusually strong USA earnings season can restore some of the optimism that characterized equity markets a year ago. "And that could be true for Mexico as well as for China".

Investors were also rattled by China announcing Monday that it is raising import tariffs on US pork, apples and other products, a move that ratchets up trade-war talk between the world's two biggest economies.

Microsoft rose 1 percent and Amazon climbed 1.3 percent. The online retailer has slumped with the market recently, although it's still up about 17 percent in 2018.

Technology gains were led by Facebook, Intel, Alphabet and Microsoft shares.

"It seems like the long arm of the government is interfering with investors' expectations", he said.

Tech shares traded lower, with semiconductor-related plays underperforming the broader market. Beijing responded to Trump's steel and aluminum tariffs on Monday by following through on its threat to impose tariffs on $3 billion of USA imports.

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The Dow moved higher as gains in shares of Nike and those of Johnson & Johnson, recently up 2.9 percent and 2.2 percent respectively, outweighed declines in shares of General Electric and those of Walt Disney, down 1.1 percent and 0.5 percent respectively.

Humana (HUM) shares rose following continued reports Walmart (WMT) could buy the company or form a partnership with the health insurer.The Wall Street Journal reported on the possible deal last week. The yield on ten-year US Treasury bonds also jumped 2 basis points to 2.75%.

Amazon fell another $70.84, or 4.9 percent, to $1,376.50. Brent crude, used to price global oils, slid $1.52, or 2.2 percent, to $67.82 a barrel in London.

The financial sector, which accounts for more than a third of TSX's weight, was the leading decliner with the banks off 1 per cent. USA oil futures fell less than 1% to about $63 per barrel. Natural gas slid 5 cents to $2.68 per 1,000 cubic feet.

CURRENCIES: The dollar slipped to 106.49 yen from 106.62 yen in late trading Tuesday. The euro edged up to $1.2308 from $1.2306. The Cboe Volatility Index.VIX, the most widely followed barometer of expected near-term volatility for the S&P 500, was down 0.13 point at 20.97.

Markets in Australia, New Zealand and Hong Kong were also closed Monday for a public holiday.

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