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May 6, 2019, 8:12 PM UTC/ Source: CNBC.com
By Fred Imbert, CNBC
Stocks recovered the bulk of their earlier losses on Monday as investors bet China and the U.S. will still strike a trade deal despite President Donald Trump’s threat to hike tariffs on Chinese imports.
The Dow Jones Industrial Average was down just 75 points, while the S&P 500 traded 0.4 percent lower. The Nasdaq Composite was down 0.5 percent.
The market’s comeback accelerated after CNBC reported that Chinese delegation will in fact still travel to the U.S. to continue negotiations this week, according to sources, albeit with a smaller group than originally planned.
The Dow was down as much as 471 points on Monday, while the S&P 500 traded down 1.2 percent at its lows. The Nasdaq was briefly down 2.2 percent.
Stocks initially fell after Trump tweeted on Sunday that the current 10 percent levies on $200 billion worth of Chinese goods will rise to 25 percent on Friday. He also threatened to impose 25 percent tariffs on an additional $325 billion of Chinese goods “shortly.”
Though trade negotiations between Washington and Beijing officials are set to resume on Wednesday, the president lamented that the progress is moving “too slowly” as China tries to re-negotiate terms of the deal.
“What happened overnight is a bit of posturing on both sides. I think both sides want to continue the progress to reach a trade agreement,” said Michael Arone, chief investment strategist at State Street Global Advisors.
U.S. Trade Representative Robert Lighthizer, known for his hawkish economic views toward China, has encouraged Trump not to remove the taxes on Beijing’s goods until