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Dow drops as new tariff deadline looms

U.S. stocks dropped as investors weighed President Donald Trump’s upbeat commentary about a new China trade deal against the prospect of new tariffs on billions of dollars worth of Chinese imports set to take effect at the end of the day.

The S&P 500 (^GSPC) fell 0.3%, or 8.71 points, as of market close. The Dow (^DJI) dropped 0.53%, or 138.84 points, but bounced back from being down as many as 450 points earlier in the session. The Nasdaq (^IXIC) fell 0.41%, or 32.73points.

Equity losses became shallower Thursday afternoon after Trump told reporters he believes he has an “excellent” alternative to a trade deal with China, according to a CNBC report.

On Sunday, President Donald Trump tweeted that he intended to raise the rate of tariffs on $200 billion worth of Chinese imports to 25%, and impose that same rate of taxes on an additional $325 billion worth of goods. The unexpected threat of escalation generated a whirlwind of volatility in markets, and was reportedly spurred by Beijing’s last-minute reneging on a slew of key parts of the working trade deal.

The new tariffs will go into effect at 12:01 a.m. on Friday. Meanwhile, the U.S. and Chinese delegations are scheduled to continue trade talks in Washington, D.C., on Thursday.

However, the prospects of the U.S. and Chinese delegations reaching a deal before the deadline has so far looked dim. During a rally in Florida Wednesday night, Trump said that China “broke the deal” with the U.S., and that “they’ll be paying.” China’s Commerce Ministry said on Wednesday that the country is prepared to take “necessary countermeasures” to retaliate in the event that the U.S. implements additional tariffs.

STOCKS

Uber (UBER) is set to price its initial public offering Thursday after market close, with shares then to begin trading on the New York Stock Exchange Friday. The no. 1 ride-hailing giant’s stock offering comes on the heels of a sudden stock market drop this week and a disappointing public debut by peer ride-hailing company Lyft (LYFT), which has seen its shares fall more than 25% from its IPO price over the past month. As of Wednesday, Uber was reportedly looking to price its IPO at or below the midpoint of its targeted range of between $44 and $50 per share.

Uber's IPO comes on the heels of Lyft's public debut. (AP Photo/Gene J. Puskar)

Chevron (CVX) announced Thursday that it will not increase its offer price to acquire Anadarko (APC), effectively ending the jockey between it and Occidental (OXY) for control of the company with deep inroads to the oil-rich Permian Basin. Earlier this week, Occidental bumped up the cash portion of its bid to acquire Anadarko for an offering totaling $76 per share, outpacing the about $62 per share cash-and-stock offer from Chevron, based on Monday’s closing prices. Occidental was also backed with a $10 billion investment from Warren Buffett’s Berkshire Hathaway to help fund the offering.

Disney (DIS) reported fiscal second-quarter results after market close Wednesday that beat Wall Street’s expectations, although it posted a widening loss in its segment housing its new streaming platforms. Adjusted earnings of $1.61 per share were lower than last year’s $1.84 per share, but better than the $1.57 per share expected by Wall Street, as investors braced for Disney’s recent direct-to-consumer investments and uptake of 21st Century Fox’s assets to take a bite out of the bottom line. Disney more than doubled operating losses in its direct-to-consumer and international segment to $393 million.

Intel (INTC) CEO Bob Swan provided a disappointing outlook for the company’s revenue growth for the coming years, sending shares lower in early trading. In a presentation at Intel’s 2019 investor meeting Wednesday, Swan said Intel’s top-line will see growth in just the low single digits over the next three years. The company sees growth in its key personal computer chip business to be flat, to down slightly.

ECONOMY

The producer price index for final demand rose by a seasonally adjusted 0.2% in April, coming in slightly below expectations for a 0.3% uptick for the month. In March, PPI jumped 0.6%. For the 12 months through April, PPI rose 2.2%, or the same pace as in March. Excluding volatile food and energy price, PPI rose 0.1% month-over-month and 2.4% year-over-year. Consensus expectations were looking for PPI, ex-food and energy prices, to rise 0.2% on a monthly basis and 2.5% on an annual basis.

The U.S. trade deficit in goods and services widened to $50 billion in March, from a revised $49.3 billion in February, the Commerce Department reported Thursday. March exports rose by $2.1 billion from February to $212 billion, while March imports rose $2.8 billion to $262 billion.

New jobless claims fell less than expected for the week ending May 4, the Department of Labor reported Thursday. New unemployment claims fell by 2,000 from the week prior to 228,000, above expectations for just 220,000 new claims, according to consensus economists polled by Bloomberg. Continuing jobless claims for the week ending April 27 unexpectedly rose to 1.628 million, from 1.671 million the week prior. Consensus economists expected continuing claims to tick down slightly to 1.670 million.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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