Damage Made. All three major U.S. stock indexes plunged Monday as China began to push back against U.S. tariffs. The Chinese yuan fell sharply to reach its lowest level against the dollar in more than a decade, and Beijing has reportedly asked state-owned enterprises to halt purchases of U.S. agricultural goods. Apple stock (ticker: AAPL) is today’s biggest loser in the Dow, as analysts expect most of the company’s products to be hit by the latest round of tariffs. In today’s After the Bell, we…
evaluate the Chinese yuan’s drop below a critical level; check on the impact of a weaker yuan on U.S. companies and consumers; and wonder how far the market will fall before it finds support again.
China Strikes Back
Stocks plunged on Monday as a full-blown trade war seems likely. The Dow Jones Industrial Average lost 767.27 points, or 2.90%, to close at 25,717.74. The S&P 500 fell 87.31 points, or 2.98%, to finish at 2844.74, and the Nasdaq Composite stumbled 278.03 points, or 3.47%, to close at 7726.04.
Asian and European markets are in a similar spot. The U.K.’s FTSE 100 closed down 2.5%, Japan’s Nikkei Stock Average fell 1.7%, and the Shanghai Composite lost 1.6%.
Investors are worried that the trade war will devolve into a currency war, as Chinese government allowed the exchange rate to fall below seven yuan to one U.S. dollar on Monday, a psychologically important level for market participants. The currency hasn’t been this weak in at least a decade. China’s central bank said the depreciation was “due to the effects of unilateralist and trade-protectionist measures and the expectations for tariffs against China.”
The depreciation is