Dow Jones Futures, Apple Stock Fall On Trump’s China Trade-War Threat

Dow Jones futures fell late Monday, along with S&P 500 futures and Nasdaq futures, as President Donald Trump said he expects to impose new China trade tariffs, including on Apple iPhones. The latest China trade-war threat comes ahead of his big meeting with Chinese President Xi Jinping. In Monday’s stock market, the Dow Jones, S&P 500 index and Nasdaq composite rebounded, but it’s still a stock market correction. Microsoft (MSFT) rebounded, continuing to fare well amid a big week for software earnings and cloud-computing news from the Amazon Web Services conference. Microsoft stock is on the verge of overtaking the market cap of fellow Dow component Apple (AAPL), which fell late. Apple stock also isn’t far above Amazon stock.

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Stock Market Rally

The Nasdaq composite rose 2.1%, the S&P 500 index 1.55% and the Dow Jones 1.5% in Monday’s stock market trading. That’s day three of a stock market rally attempt for the Nasdaq composite, but only the first day for the S&P 500 index and Dow Jones. The Nasdaq could have a follow-through day as soon as Tuesday to confirm its new rally.

Dow Jones Futures Today

Dow Jones futures fell 0.45% vs. fair value. S&P 500 futures lost 0.5%. Nasdaq 100 futures retreated 0.7%. Apple stock — down 2.1% late on the China trade-war threat — is a major component of the Dow Jones, S&P 500 and Nasdaq composite. Remember that overnight action in Dow futures, Apple stock and elsewhere doesn’t necessarily translate into actual trading in the next regular session.

Trump Set To Escalate China Trade War

Trump told the Wall Street Journal that he’s “highly unlikely” to hold off on new China trade tariffs, just days before a Trump-Xi meeting on Saturday. He expects to go ahead with raising tariffs on some $ 200 billion worth of Chinese goods from 10% to 25% on Jan. 1. He also said he’s ready to impose tariffs on all remaining Chinese imports if U.S.-China trade talks don’t reach a deal. Notably, Trump said he could place a 10% tariff on Apple iPhone handsets imported from China.

Trump’s threat to escalate the China trade war may be tough talk to try to win concessions from Xi. Wall Street’s reaction may be muted until the actual Trump-Xi meeting signals an escalating China trade war, a truce or an outright deal. But it’s a reminder to investors that the Trump-Xi meeting could spur a deeper stock market correction and not just be a catalyst for a stock market rally.

In addition to Apple stock, fellow Dow Jones component Boeing (BA) also fell late after snapping an 11-day losing streak Monday. Amazon stock, Nvidia (NVDA) and Tesla (TSLA) also lost ground. On the upside for Dow Jones futures and S&P 500 futures, United Technologies (UTX) rose modestly late on its plan to split into three companies following its just-closed acquisition of Rockwell Collins.

Microsoft Stock Vs. Apple Stock

Apple stock fell intraday Monday to its worst level in nearly seven months. Shares closed up 1.4% to 174.62, lagging the major market averages. Microsoft stock, meanwhile, rose 3.3% to 106.47, moving back toward its 50-day line after finding support at its long-term 200-day line last week.

Apple stock closed Monday with a market cap at $ 828.6 billion, a big descent from well above $ 1 trillion at its Oct. 3 peak. Microsoft stock closed at $ 817.3 billion, briefly topping Apple’s market cap intraday. Microsoft, less exposed to the China trade war, was off a fraction late, signaling it could seize the market-cap crown from Apple stock Tuesday.

Meanwhile, No. 3 Amazon stock rebounded 5.3% Monday, giving it a market cap of $ 773.2 billion. Shares dipped 0.7% late.

Amazon stock rallied Monday on strong holiday online sales and the annual Amazon Web Services conference. AWS is the top cloud-computing services business by far. But No. 2 Azure (from Microsoft) and other cloud businesses are growing fast, fueling accelerating revenue growth. Other big players include Alphabet (GOOGL)-unit Google, Alibaba (BABA), IBM (IBM) and Salesforce.com.

Meanwhile, Salesforce earnings are due late Tuesday. The stock market correction has hammered the software sector, including Salesforce.com (CRM). Salesforce, along with several other top software giants, reports this week. Those results could offer clues about business IT spending heading into 2019 amid signs of slower economic growth.

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