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Dow Jones futures fell sharply late Monday, as did futures on the S & P 500 and Nasdaq, as senior US officials said Chinese tariffs would rise on Friday as negotiations trade with China was deteriorating this weekend. This echoed the threats of President Donald Trump in recent tweets and amplified them. The current stock market rally showed resistance on Monday, bouncing back after the sharp opening losses. Apple (AAPL) Boeing (BA), Micron Technology (Mute Qualcomm (QCOM) were among the stocks exposed to China that reduced their losses Monday and fell slightly after normal hours.
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Dow Jones Futures Today
Dow Jones futures declined 0.5% from fair value. Apple and Boeing shares are both components of Dow. The futures on the S & P 500 index lost 0.6%. Nasdaq 100 futures lost 0.7%.
Do not forget that day-to-day futures trading on Dow and elsewhere do not necessarily translate into actual trading at the next regular trading session. Dow Jones futures plummeted more than 1.5 percent in Sunday night as a result of Trump's tariff threats, signaling the opening of Monday's stock market. But this is not how the Dow or other indexes closed the session.
The trade war in China should intensify
US Trade Representative Robert Lighthizer said US tariffs on Chinese goods worth $ 200 billion would increase from 10% to 25% as of Friday. He added that China was revisiting the provisions of the already agreed trade agreements. Lighthizer and Treasury Secretary Steven Mnuchin spoke of a major shift in trade talks with China this weekend.
These statements basically echo what President Trump said in his tweets on Sunday and early Monday.
However, trade talks with China will continue in Washington this week. Lighthizer and Mnuchin said they expect Vice Premier Liu He, Beijing's chief trade negotiator, to be present. But they also said that they had not been in contact with Liu in the last 24 hours.
Current stock market rally
The current stock market rally showed some resistance on Monday. The Nasdaq composite, down 2.2% just after opening, lost 0.5%. The Dow Jones and S & P 500 index ended up with smaller losses. The Russell 2000 closed slightly higher.
The Apple stock, down 3.9% intraday, closed down 1.5%. Boeing shares fell 1.3%. Shares Qualcomm and Micron fell 1.2%, also close to the highs of the session.
Apple and Boeing shares fell by less than 1% at the end of the session. The same has been true for Qualcomm and Micron stocks, as well as for many other semiconductors.
Wall Street may have decided Monday during the regular session that Trump would not end up raising tariffs and that a trade deal with China is still likely. But if Trump aggravates the trade war with China, the current stock market rally could be much more penalized.
However, Dow Jones futures, although below fair value, are not close to Monday's low points.
Among the best ETFs for growth stocks, the Innovator IBD 50 (FFTY) fell by 0.6%. The VanEck Vectors Semiconductor (SMH) ETF lost 1.6% as the chip sector was exposed to the trade war in China. But the iShares Expanded Tech Sector Software (IGV) ETF was down only 0.1%.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock updates and more.
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