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Nasdaq Leads Stocks Lower As U.S. Amps Up Trade Threats; Netflix Dives

The final week of the second quarter set out on a weak note Monday, as US. stocks opened down hard after trade fears had dragged markets in China and Europe lower.

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Chip stocks and China-based names took the early brunt of the latest exchange in the U.S.-China trade war. Intel (INTC) lagged lower, followed by Micron Technology (MU) and ASML Holdings (ASML). Among China-based stocks, smaller names felt the hardest early hits, but Alibaba Group (BABA), Baidu (BIDU) and JD.com (JD) also gave up ground in early trade.

The Nasdaq Composite skidded 0.8% lower as Intel, Ctrip.com International (CTRP) and Micron Semiconductor suffered the index's deepest early declines.

The Dow industrials carved a 0.7% loss. The S&P 500 traded down 0.5%. Carnival (CCL), Intel and Kroger (KR) posted the three deepest losses among S&P 500 stocks.

China's markets and currency tumbled lower Monday as the Trump administration broadened its definition of what it considers a threat to the U.S. economy. The Treasury Department is reportedly at work on trade rules that would block China-owned firms from investing in "industrially significant technology" in the U.S. Also, the National Security Council and the Commerce Department are ratcheting up restrictions on export of such technologies to China. Increased U.S. trade tariffs against goods imported from China are due to take effect July 5.

Hong Kong's Hang Seng Index dumped its early gain and dived 1.3%. The Shanghai Composite crumbled 1.1%. In Japan, Tokyo's Nikkei 225 slumped 0.8%.

The selling washed into Europe, where markets opened sharply lower. Frankfurt's DAX and London's FTSE 100 each drilled down 1.6% in afternoon trade 1.2%. The CAC-40 in Paris 1% lower.

Dow Futures: Intel, Boeing, United Tech Lead Declines

The Dow industrials closed Friday just 0.3% below its 50-day moving average. That gap widened at Monday open, but trade was far from grim. Intel was the only Dow issue down more than 2%. And only two Dow issues, Boeing (BA) — a name clearly within the definition of the White House's "industrially significant technologies" category — fell nearly 3%. That was enough to send the stock more than 8% below a 331.10 buy point, triggering the automatic sell rule.

Intel tumbled 2.3%, still reeling from Thursday's news that Chief Executive Brian Krzanich would resign after having a relationship with an employee. Chief Financial Officer Bob Swan is now serving as interim CEO. Intel shares dropped 4.8% last week. A report Sunday from the Wall Street Journal said competitors had begun eating into Intel's market share, as manufacturing issues under the Krzanich regime delayed delivery of high-end chips. On Monday, Nomura downgraded Intel to neutral, from buy, and trimmed its price target to 55, from 60.

Harley Davidson shares fell 2.9% after a regulatory filing said the company would shift production for motorcycles sold in the European Union out of the U.S. in order to avoid trade tariffs. Tariffs of 31% imposed by the EU would raised costs for U.S.-made Harley's by ardoun $2,200 each, the company said. Harley sees 15% of its sales from the EU. The company has previously navigated around tariffs in other countries by setting up manufacturing operations places including Thailand. Harley said it would make the move in the next 18 months. Harley shares have been in a deepening correction for 15 months.

Alphabet, Netflix Drop; China, Chip Names Take Hits

The FANG stock tech leaders fell hard in early trade. Netflix (NFLX) led, down more than 4%. That left the IBD Leaderboard name is 14% above a 338.92 buy point in a flat base. The stock had climbed more than 20% above the buy point last week, placing it in a profit-taking zone.

Alphabet dumped 2.2%, sending it back below a handle buy point at 1,161.20 in a double-bottom base.

Gray Television spiked more than 17% in premarket trade. The television-station owner announced it would pay $3.6 billion in cash and stock to acquire Raycom. Montgomery, Ala.-based Raycom owns 65 television stations in 20 states. The combined company would own 142 full-power stations in 92 markets, giving it the third-largest portfolio in the U.S., the company said in a release. Gray shares have been consolidation since February, ending Friday 39% below their February high.

China-based stocks were bludgeoned in premarket action. Huya (HUYA), 58.com (WUBA) and iQiyi (IQ) all fell more than 4%.

Among chip-related names, Netherlands-based ASML Holdings sliced 2.6% lower and Micron Technology shed 2.4%, leading the losses on the Philadelphia Semiconductor Index.

On the IBD 50 list, China names YY (YY) and ZTO Express (ZTO) each shed more than 2%. YY has been maintaining support as it builds the right side of a six-month base. ZTO dived 8.4% last week, leaving it still extended above an 18.18 buy point in a cup base.

Earnings, Oil, Economic News: Chicago Fed Index, New Home Sales

In economic news, the Chicago Federal Reserve Bank's National Activity Index turned negative, reading a minus 0.15 for May that was sharply below April's positive 0.42 tally. The index's three-month moving average fell to a positive 0.18, down from 0.48 in April.

May new homes sales data from the Commerce Department are due out at 10 a.m. ET.

Oil prices were mixed, with U.S.-benchmarked West Texas Intermediate up 0.8% and Europe's Brent crude benchmark down 1.6% in morning trade. Brent was below $75 per barrel. WTI held just above $69. WTI had surged more than 4% on Friday, after OPEC and partners including Russia agreed to a nominal 600,000-barrel increase to its production quota.

The second-quarter reporting season doesn't start for another two weeks, but late-season reports continue to roll in from the March quarter. Cruise line Carnival tanked nearly 9% after reporting a stronger-than-expected second-quarter performance. But the company's third-quarter and full-year earnings guidance were below expectations.

Lennar (LEN) and Schnitzer Steel (SCHN) report on Tuesday. General Mills (GIS) and Rite-Aid (RAD) are due on Wednesday, with Nike (NKE), Walgreen Boots Alliance (WBA) and KBHome (KBH) due later in the week.

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