Stocks tumbled during Tuesday’s session, and the S&P snapped a 8-day winning streak, as trade tensions heated up between the U.S. and the European Union. The Industrials and Materials were the worst-performing sectors during the trading session.
Crude oil (CL=F) continued its rally on Tuesday, hitting year-to-date highs. Continued conflict in Libya gave the commodity a boost, and it closed at $64.10 per barrel.
The U.S. has said it will be slapping tariffs on $11 billion worth of EU goods after the World Trade Organization found that the EU’s subsidies to Airbus have had an adverse impact on the U.S.
President Donald Trump tweeted the following Tuesday morning:
The World Trade Organization finds that the European Union subsidies to Airbus has adversely impacted the United States, which will now put Tariffs on $11 Billion of EU products! The EU has taken advantage of the U.S. on trade for many years. It will soon stop!— Donald J. Trump (@realDonaldTrump) April 9, 2019
In a preliminary list released by the U.S. Trade Representative Robert Lighthizer’s office, the U.S. tariffs could impact anything from helicopters, salmon, yogurt, butter and cheese.
“This case has been in litigation for 14 years, and the time has come for action. The administration is preparing to respond immediately when the WTO issues its finding on the value of U.S. countermeasures,” U.S. Trade Representative Robert Lighthizer said in a statement. “Our ultimate goal is to reach an agreement with the EU to end all WTO-inconsistent subsidies to large civil aircraft. When the E.U. ends these harmful subsidies, the additional U.S. duties imposed in response can be lifted.”
The EU has also indicated that it plans to retaliate against the threat from the U.S.
Moreover, U.S. Treasury Secretary Steven Mnuchin headed to Capitol Hill to testify before the House. Mnuchin was grilled by House Democrats about President Trump’s tax returns. Last week, the House Ways and Means Committee requested that the Internal Revenue Service hand over six years of the president’s tax returns. The Trump administration has stated that it will not be releasing the president’s tax returns without a fight.
STOCKS: Facebook jumps on analyst call, American Airlines sinks after slashing outlook
Facebook (FB) stock rose 1.5% after Morgan Stanley raised its price target from $190 to $195 per share, which is about an 11% move higher from Tuesday’s opening price. Analyst Brian Nowak anticipated strong ad revenue from Instagram and said that the data scandal wasn’t really impacting the social media company’s user engagement or ad dollars. Facebook shares are on pace for their highest close since August.
American Airlines (AAL) shares sank nearly 2% after the company slashed its first-quarter revenue outlook. The airline cited a material impact from the grounding of 24 Boeing 737 MAX airplanes. American Airlines now expects revenue per available seat mile, a key industry metric, to be flat to up to 1% during the quarter, down from the flat to up to 2% previously expected. The company said that it had to cancel 1,200 flights in the first quarter because of the groundings and plans to extend flight cancellations until June 5.
Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.
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