Glee about a big tech merger sent stocks soaring Monday, but then dread about the threat of new tariffs on China sent them plunging. The Dow swung more than 900 points from its highs of the day to its lows and finished with a more than 245-point loss.
Stocks turned lower in the afternoon after Bloomberg reported that the White House is considering more tariffs on Chinese goods by December if the next round of negotiations between President Donald Trump and Chinese leader Xi Jinping do not go well.
"We'll see what happens," said White House Press Secretary Sarah Sanders on Monday about the meeting. "We're not going to get ahead of those conversations."
The S&P 500 fell 0.7% and the Nasdaq dropped 1.6%. The Dow, which had been up more than 350 points earlier Monday morning, is now more than 9% below its all time highs. Both the Dow and S&P 500 gave up their gains for the year as well.
The Dow was dragged lower in particular by Boeing (BA), which has significant exposure to China and also has the highest stock price in the Dow. Shares fell 6.6%. (The Dow is weighted by stock price, not market value like most other indexes.)
IBM's big acquisition of cloud computing software company Red Hat for $34 billion led to a short rally earlier Monday for tech stocks that quickly fizzled.
IBM (IBM) sank more than 4% to a new multi-year low. Other tech stocks struggled too. In addition to IBM, Big Blue rival Microsoft (MSFT) fell about 3%. Shares of Dow components Apple (AAPL), Intel (INTC) and Cisco (CSCO) all finished the day lower, too.
And the damage was even more brutal for members of the so-called FANG club of momentum tech stocks.
Shares of Facebook, which will report its earnings after the closing bell Tuesday, fell 2%. Amazon shares were down 6%, Netflix's stock fell 5% and Google owner Alphabet (GOOGL) dropped 4.5%.
Concerns that Big Blue may be paying too much for Red Hat (RHT), which soared 45%, may have hurt tech and the broader market. The IBM deal was also the main bit of news since there were no significant earnings or economic reports of note Monday.
Monday's roller coaster moves are discouraging, especially after last week's extreme volatility, when stocks fell for a variety of reasons.
Disappointing earnings and guidance from industrial bellwethers 3M (MMM) and Caterpillar (CAT) played a part, as did worries that tech giants like Netflix (NFLX) and Amazon (AMZN) were starting to look overvalued.
Weak housing market data hurt big bank stocks as well.
To top it all off, investors remain nervous about the trade tension with China, a stronger dollar eating into profits, and rising interest rates from the Federal Reserve.
But earnings take center stage later this week. Apple, Facebook (FB), General Electric (GE), General Motors (GM), Coca-Cola (KO), Starbucks (SBUX), Kraft Heinz (KHC), Chevron (CVX) and Exxon Mobil (XOM) are among the notable firms to report results.
Wall Street will also be watching Friday's jobs report very closely for signs of stronger wage growth and a possible uptick in inflation.