this is "nighthtly business report" with sue herera and bill tocks plunge. china strikes back with retaliatory tariffs, wiping out about $1 trillion in market value worldwide. caught in the middle a small new jersey manufacturer in pull back on growth plans. price fixing accusations. a s ceping lawsuitims generic drug compani conspired to inflate prices d their stocks fall sharply. those story and much more tonight on nightly business report for monday may 13th. >> good evening, everyone. and welcome. what a way to start the week, stocks fell sharply at the open

and stayed there. as tensions flaired when china slapped new tariffs on u.s. the fear is, that a heightened and prolonged trade fight etween the world's two largest economies could hurt global growth and could have a very broad impact. r let's ght to the closing numbers. the dow jones dropped617 points to 25,327. the s&p 500 fell 69 points. kayla starts us off tonight on the latest developments on the u.s./china trade war. >> both the u.s. and china are arminghemselves as the trade war drags on. they will slap new tariffs on $60 billion in u.s. goods from light bulbs to peanuts to atbee. the u.s. targets the remaining $300 billion in goods china sends to the u.s. each year that has so far been spared.ru president t says he hasn't decided yet whether to launch those tariffs. >> we have another $325 billion

we can do if we decide to do a. >> tensions heat up, there's room for some good will.ew china's n tariffs don't take effect for three weeks. president trump is pointing to the g- meeting at the end of june in japan. >> maybe sng will happen, we'll be meeting as you know, at the g-20 in japan. that will be i thirobly a very fruitful meeting. >> the next several weeks will be critical, with the treasury secretary saying plans to open.alks >> when will you go to beijing? >> we're working on gtes, noth confirmed yet. >> china may be sharpening other tools too. they could stop purchasing farm and energy products. cut back on orders of boeing planes pndossibly dump sury. mnuchin dismissed that idea. >> will china continue to buy our debt? >> issume so, it's great investment. >> despite the volatile market e tion to the tit for tat.

the president loves t positio the u.s. and economy are in. negotiators continue to sayl helk away if any deal doesn't produce permanent change. >> as sue mentioned, the trade trong ns resulted in selling on wall street today. bob posani takes a look at the market's ugly mood. >> trade tensions flaired up today. the dow plummeting more than 700 points to close at its low. stocks were down overnight, they turned evenower prior to the open. these new higher tariffs will affect farmers and thousands of products. apple, boeing, caterpillar, all three are down about 20% or more from their recent highs. stocks did come off their lows late in the day on a few comments from both u.s. treasury secretary steve mnu president donald trump saying trade talks were still on going,

that's not much of the market to go on. why is this? >> the trade wars hav suddenly become very real. we not only have higher tariffs on existing goods, we have a very specifichi response targeting u.s. agriculture products, with possible other asures to come. let's take a look at commodity so futures plummeted to eaices. their lowest levels in more than a decade. cotton prices are aling under pressure. we've had talk of the u.s. expanding tariffs to all china imports which would partilarly target the technology field. one reason apple's dow today. for many, the damage is already done. retailers are getting hit because their input costs are about to rise. names like macy's gap, nordstrom, they all closed at new 52-week lows today. for nightly business report, i'm bob posani at the new york stock exchange. more now on boeing and the bond market, both of which kaylo med in her report. the editor of the global times

tweed. china may stop purchasing u.s. oericultural products and energy, reduceg orders and restrict the u.s. service trade withchina. many chinese scholars are discussing the possibility of dumping u.s. treasuries and how to do it specifically. a boeing spokespersonays the company is confident the u.s. and china will continue trade c discussions ae to an agreement that burn fits both u.s. and chinese and consumers. nonetheless, the stock fell more than 4 1/2%. >> what about that line in the chinese editor's tweet about china selling u.s. treasuries. china is the biggest buyer of our de. what wou happen to interest rates and our economy if it started selling those treasuries. ll adams is senior economist with dnc financial services group. bill, thanks for joining us tonight. >> thanks for having me. >> it's considered highly unlikely they would think about selling too many of their treasuries. what do you think -- i't it

interesting they even brought it up? what do you think would happen if they did start thinking about selling inside? >> i think if we did see a large sale of treasuries by china's central bank, we would see treasury bonds fall, yields move higher over a short period of time. afr that, it's likely that the federal reserve would intervene in the treasurely market and buy treasuries, that's what the whole point of quantitative sing was. if they saw yields moving in a direction that was out of line with their goalsor the u.s. economy, i think the fed has the tools to bring interest rates back where they want them. >> our caption down on the floor of the new york stock exchange suggested that perhaps a worst case scenario would be if china just stayed o of the auction and didn't buy any more u.s. treasuues. what do make of that scenario? >> i actually -- i think china haseady stepped back quite a

bit from financing the u.s. . governme chinese foreign exchange reserves, peekeddt aro 4 trillion u.s. dollars. and now they're down to 3 trillion u. dollars. china has already changed from being a net buyer to a net seller over a multiyear time horizon. and the ten-year government bond yield is only 2.4% right now, and the u.s. economy conties to grow >> but again, we don't want to panic anybody, there is highly unlikely the chinese would sell too many of their treasuries, why is that let's explain that? >> china owns treasuries, not becaee they l the u.s. government or they want to finance it, but because it's an insurance policy against a shock to the chinese financial syst. treasuries are a risk frias et in the united states. and the u.s. dollar is the currency.eserve having treasuries is a buffer against bad things happening outside of china and affecting the chinese financial system.

with this conflict between the united states and china and down side risk to global growth. all the more reason china doesn't want to tear up its insurance policy today. 12 am. >> bill thanks for joining us tonight, bill. >> thanks for having me. the n tariffs have been kind to a manufacturer in new jersey. contessa brewer took a trip to piscataway to measure the impact on the business firsd. >> reporter: a long line of facing a long list of tariffs. they manufacture equipment for the railroad and transportation dustry. the tariffs are derailing brands for growth. many of the finished parts are de in china and sent to the u.s. they were just slapped with a tariff increase. now totals 25%. ilit w cost this small company in central new jersey $14 million over 15 months.

and buying all american isn't an option. >> the problem is, we can only, the industry is only clined about 30% of the products necessary for the industry domestically. >> reporter: these parts will equip san francisco's public transit system known a bart it will pick up the additional costs of the tariffs, which means taxpayers and riders are footing thebill. strato is hiking prices as much as 10%. >> it forces the railroads to do, pass the cost on to the shippers the shippers have to pass the cost on to the consumer, and that's every one of us. >> reporter: like thousands of other american businesses, strato is looking for ways to cut costs.kf it's wce has declined 10%. employees arewo ied, their bonuses depend on thecompany's

growth. >> we've invested about $30 millionn the lastive years in new product development. we are p that way back at this point in time. and it's just -- it's slowing the development for the industry. and the economy is going in the right direction. it's growing. grow il system needs to with it. those stuck in th middle of a global trade war are just hoping something will spark a change. inta pisy new jersey con tess is brewer, nightly business report. >> the federal reserve is watching how this tariff spat plays out and how it may affect the economy. market expectations f a rate cut are changing right now. steve liesman has more. >> reporter: in the wake of new tariffs for president trump on chinese goods and chinese retaliation on u.sgoods. markets are pressing in a corner

point cut by october. and maybe as soon as september. the probabilities i the fed fund market price a 60% chance of a cut by september, 75 by december and 90% by january 2020. but for one fed official, it's too soon to make thatcall. >> i'm hopeful cooler heads will prevail and this thison't go down a nasty path. obviously, it's the worst case scenario, and ever increasing tariffs for an extended period of time. that could change things. right now i'm not see.g i'm in a wait and see mode. >> the federal reserve also has to weigh the probabilities on the outcome of negotiations, whether or not there's a deal. how long tariffs could be in place. how equity markepo r in the impact of lower stock prices. and the effect of all ts on business confidence and capitol spending. the trade war could hold global capital spending growth to

spending this year. and dampen gdp by 8%. it could amplify an easing bias that is rate cuts across the orobe. leadingn stanley to forecast serious easing. if the trade battle lasts 3 to t . economists see more chinese stimulus andis 50 b points or half a percentage point of cuts for the fed. >> i'm steve liesman. >> with fed expectations changing and the market selling off, is now the time to get defensive. >> joining us is jack ab lynnt crescent capital. welcome back, jack. nice to see you. >> nice to see you to >> there are expectations this will be a long fight. and others say on the shorter side. you say stay put for now as an individu, invest why is that? >> i'm not ready to pull my hair out quite yet, sue. think there are three stages

of down drafts. there's a technic one which we're currently in. then there's one, what i would call cyclical which starts impairing the global economy. and then there's systemicwe one ad to endure back in the financial cris. the good news here is, we can take systemic downturnff the table. now the question is, are we in a technical downdrt, which perhaps there's a10 downside risk to or something more cyclical, where the tariffs start to impact economic growth and the down draft could be a little more severe? >> there's no evidence yet that this war is going to just continue on to start impairing economic growth. >> right. >> for my perspective, we're still in that technical phase and probably worth just standing pat for now. >> would you buy with some of the declines we've seen in the

last two weeks? >> yeah, i mean, forhose investors who are sitting on the sidelines, it's a couple of easier ways to get into the parts of ld be those the market that are somewhat vagueries of the these kinds of tariffs, that would be u.s. small caps, theye would to do better as these tariff tariffs thescalate. tend to do most of their business here domestically. certainly foc on services rather than goods could be another way to play . another would be rates. rates are generally considered u.s. based. pretty much just real estate. now, they are expensive. but they have done pretty well as a defensive play in this kind of environment. and then lastly, master limited partnerships, mlp's, domestically focused income

oriented, andhey are treep. but keep in mind they are tethered to the global ma wet. do see a selloff in crude, they'll likely go along with it, they're cheap enough that there's a push in there and a cent yield. ack thank you so much. jack ablinn with crescent capital. still ahead, one sweeping lawsuit. back to boeing, that company is not only dealing with china right now. but fallout from those two deadly 737 maxcrashes. one of the planes that went down belonged to ethiopian airlin, tonight in an nbc news exclusive. irline says hat he's not sure what the future h

holds f company and for the airplane maker. >> it may if we are to convince our if we are ever to convince our traveling public. because, you know, all our headhenes have turned airplane. but in our place, we have this tragic accident a couple months ago. so it takes a lot of efforts to convince everybody that the airplane -- but i think we have to -- and we want to do that. >> hisirline does fly those jets again, they'll be the last to do so. >> apple alreadynder pressure from a trade war with china got cre bad news today. the suprert will allow an antitrust class action lawsuit to move forward after a group of

iphone owners accused apple's app store of being a monopoly. consumers have the right to sue the company, it n does accuse apple of violating the law. the stock fell nearly 6% in today's ssion. it was a tough day in the marketplace for some drug makers. 44 states have filed a massive lawsuit accusing a number of pharmaceutical companies of conspiring to inflate generic drug prices. teva was hit the hardest, down almost 15% today.n myla and pfizer were also named in that lawsuit. meg jerrell has details. >> reporter: after patent protection expires on branded drugs, generic drug makers compete to bring cheaper copies to market. at least that's how it's work.sed to a new lawsuit alleges generic drug makers conspired to drive prices up fp.

>> i think what we've come upon is tha the generic drug industry is the largest private sector cor cartel in history. >> the news drove stocks of generic drug makers down sharply monday. the suit is similar to one filed in 2016. 20 genic drug manufactures including teva, mylan, novartis and sanofi -- the number of drugs, more than 100, the cost to consumers, billions of dollars. >> it'sst deing. it affects health insurance premiums and health insurance plan it impacts medicare and medicaid. and it is a chain reaction that drives up the price of american health care to a natural heist. >> the generic drug tradertroup r points out that generic

drug prices have declined over the last tee ars, the lawsuit focuses on activity from 2013 t 2015. it's clearly spooked wall street. >> depending on what it could be, this could be problematic or really problematic. >> civil a penalties return of profits from the alleged price fixing. the state says the investigation is ongoing. for nightly business report, meg terrell. >> tariffs are another thing that ford and gm have to worry about in china. that's where we begin tonight's market focus. auto sales in china fell for the 10th straight month in april. falling nearly from the same month a year ago. china's car sales fell. % last year,sl while gped 10%. ford was off 3% to 10.08. the ceo of bed, bath and beyond is stepping down from the company effective immediately. this comes as investors are pushing for chang at the retailer after sluggish sales.

the ceo is also resigning from the board. shares ofer bed bath down more than 14%. nilsson is reportedly pulling outll the stops to keep its last remaining bidder at the bargaining table by lowering its asking price. new york post says the offer could be as mh as $20 billion. and the ratings company agreed to push back the deadline to june after advent needed more time to conduct its due diligence on this. following a disappointing debut on friday, uber shares continue to decline today. some investors are questioning if the ride sharing company may take the same path as lyft. whose sres are down by nearly a third since it became public a few months ago. toy uber shed nearly 11% to $37.10. >> it ise infrastructek, events are being held acrs the

country. tonight we take a look at the drive to be less relia on the electrical grid. home builders are leading the charge, using theatest technology to build large developments that use no energy at all. diana olick is in irvine, california. >> reporter: fromhe outside, these look like your basic california condos. 44 units. inside, they're actually zero. net zero, meaning they produce much energy as they use. >> the family is more challenging,ecse you don't have as much space for solar collectors. it's a tighter site. the land is more constrained, so it's a lot more complicated to execute. >> the first large scale production builder toove into net zero. it's all electric. using energy efficient lighting, appliances and hvac and heat pump water heaters. it's built using spray foam

insulation, not just in the attic, but in the walls, making the interior much tighter, so heating and cooling are more efficient. efficiency, high solar panels. the development is using new rules from the state'sublic utility commission that allow output to be distruted to individual homeowners throughout the complex. >> even sunny california is not sungny every day, when the sun is shining, the solar system produces more energy than is needed and that energy is sold back to the utility company and the homeowner gets a credit. on dark rainy days, they use that credit and the bill comes out to net zero. >> if you have no utitybills, that's going to allow you to buy more house, and people are excitedut that. >> high demand will reduce the demand on electricity for the nation's electc grid and infra structure. >> it's not just about distributed solar.ur it's about buildings being responsive. so utilizing renewable energ i

whs available in our buildings, and not utilizing grid energy when it's not very low carbon. >> the condos are moreen eve up front. but the utility savings paysehat back in years of ownership. for nightly business report, i'm diana olick in irvine, california. coming up, why global trade tensions are putting the multibillion dollar art market to the test. it is springtime in the art auction market. th year,ising tensions between the u.s. able china could dampen one of the most lucrative seasons forhat

industry. robert frank explains. >> it is the biggest test of the year for the global art market. more than 2,000 pieces totaling between 1 1/2 and $2 billion set to be auctioned off by soth y's, christie's and phillips this week. chinese buyers accounted for 29% l of all gloction sales. six went to asian buyers, so china is critical for the growth of the art market. all collectors will be keeping a close eye on the stock market as well black swans, challenges. a macro or political level. there's not anything mored focu on art than anything else for an equity or bond holdery >> man of the top trophies this week came fromstate sales.

conde naste isli selng the most expensive piece he four since the last in private hands. it's expected to sell for 50 to $70 million at christies. even though it remains highly controversial. >> people were thinking he's out of his mind. people called it outer worldly, awful, everything it was a really radic sculpture. >> this piece is titled buffalo it comes from the state of beatrice meyer. and it's expected to sellro between 50 and $70 million. soeleby's will one of monet's paintings for over $55 miion. fou're in the market for an

animal skull tour, you can pick it at sotheby's for 2 to $3 million. i'm robert frank at christies in manhattan. a final look at thest day o wallet, big selloff to start the week off down 279 points. the s&p 500 dow 69 points today. >> what a day. that does it for nightly businereport. i'm sue herera. >> have a great evening. we'll see you torrow.

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