(AP Photo/Richard Drew)

Stocks Skid As U.S. Imposes Tariffs & Allies Retaliate

May 31, 2018 - 3:14 pm

NEW YORK (AP) — U.S. stocks are falling Thursday after the Trump administration announced that it will impose tariffs on steel and aluminum imported from Europe, Canada and Mexico. Canada and Mexico responded with tariffs of their own and the European Union is expected to follow suit.

The import duties are helping U.S. steel and aluminum companies but hurting big machinery makers like Boeing and Caterpillar. Household goods makers are suffering losses as the EU has said it could put duties on products including peanut butter and orange juice.

General Motors is surging after SoftBank of Japan said it will invest $2.25 billion in GM's autonomous car business.

KEEPING SCORE: The S&P 500 index lost 15 points, or 0.6 percent, to 2,708 as of 3 p.m. Eastern time. The Dow Jones industrial average fell 224 points, or 0.9 percent, to 24,443.

The Nasdaq composite dipped 13 points, or 0.2 percent, to 7,449 as technology companies like Alphabet and Facebook bucked the market's decline. The Russell 2000 index, which is made up of smaller companies that tend to do more business in the U.S., slipped 12 points, or 0.8 percent, to 1,635. It closed at a record high Wednesday.

STEEL OR NO STEEL: U.S. Steel jumped 1.7 percent to $36.85 and Century Aluminum gained 3.4 percent to $17.74 after the Trump administration announced its tariff plans. The stocks gave up some of their gains after Canada announced reciprocal tariffs on steel and aluminum from the U.S. starting July 1.

Boeing dropped 1.6 percent to $352.54 and Caterpillar fell 2 percent to $152.30 while farm equipment maker Deere fell 2.7 percent to $150.83. The tariffs could increase the cost of the metals they use to make their products, and tariffs in Europe or other markets could hurt their sales.

THE RESPONSE: Mexico said it would penalize U.S. imports including pork bellies, cheeses and flat steel, and reports said sausages will also be subject to tariffs. Dairy maker Dean Foods fell 4.7 percent to $9.53 and Tyson Foods, which makes products including Jimmy Dean sausages, skidded 3.6 percent to $67.72.

French officials said the EU will decide exact countermeasures in the coming weeks. European officials have threatened to retaliate against U.S. products including orange juice, peanut butter, clothing, motorcycles and bourbon.

Harley-Davidson fell 2 percent to $41.13. Hormel, which makes Skippy peanut butter, skidded 3.3 percent to $35.94 and Tropicana maker PepsiCo shed 0.8 percent to $100.07.

The EU is also expected to take its complaint to the World Trade Organization and start a review process that could take months or years.

THE QUOTE: Investors and businesses have been waiting for months as the U.S. negotiated with its trading partners over the tariffs. David Kelly of JPMorgan Funds said the dragged-out process is discouraging businesses from investing because they don't want to build up a product only to see it targeted for tariffs.

"You can do great harm to an economy just by leaving people up in the air about what the final deal is going to be," said Kelly, the chief global strategist of JPMorgan Funds. He said the uncertainty is undoing some of the effects of the recent corporate tax cut.

GM = GET MONEY: GM said SoftBank is taking a 20 percent stake in the GM Cruise automated division. General Motors stock jumped 12 percent to $42.38 and it's on track for its biggest gain since it went public again in 2010 after its emerged from bankruptcy.

WEATHER WOES: Discount retailers Dollar Tree and Dollar General both stumbled after they said inclement weather hurt their business in the first quarter of the year. Their results fell short of Wall Street projections and Dollar Tree cut its profit forecast for the year.

Dollar Tree fell 13.9 percent to $83 and Dollar General gave up 9.4 percent to $87.46.

DEUTSCHE BANK: Deutsche Bank skidded after the Wall Street Journal reported that the Federal Reserve determined the bank's U.S. business is in "troubled condition." The stock lost 4.1 percent to $11.10.

ENERGY: U.S. crude oil slipped 1.7 percent to $67.04 a barrel in New York. Brent crude, used to price international oils, added 0.1 percent to $77.59 per barrel in London.

Wholesale gasoline fell 1.1 percent to $2.16 a gallon. Heating oil lost 1.8 percent to $2.19 a gallon. Natural gas rose 2.3 percent to $2.95 per 1,000 cubic feet.

BONDS: Bond prices edged higher. The yield on the 10-year Treasury note fell to 2.83 percent from 2.85 percent and financial companies fell.

METALS: Gold lost 0.1 percent to $1,300.10 an ounce. Silver fell 0.5 percent to $16.46 an ounce. Copper stayed at $3.07 a pound.

CURRENCIES: The dollar fell to 108.83 yen from 108.85 yen. The euro rose to $1.1679 from $1.1654.

OVERSEAS: The DAX in Germany lost 1.4 percent and France's CAC 40 fell 0.5 percent. The British FTSE 100 index dipped 0.1 percent.

Asian stocks rose following big gains in the U.S. the day before. Japan's Nikkei 225 index gained 0.8 percent and Hong Kong's Hang Seng index jumped 1.4 percent. South Korea's Kospi advanced 0.6 percent.


AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP His work can be found at https://apnews.com/search/marley%20jay

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