A trader works on the floor of the New York Stock Exchange. Image Credit: AP

New York: Wall Street’s main indexes were set to drop nearly 2 per cent on Monday after Beijing announced plans to retaliate with tariffs on US goods, raising fears that another round of tit-for-tat measures could push the US economy toward recession.

Futures pointed to an almost 500-point fall at the open for the Dow Jones Industrial Average index, with Apple Inc down 3.8 per cent and chipmakers and manufacturers exposed to China taking a hit.

China’s finance ministry said on Monday it planned to impose tariffs on $60 billion (Dh220 billion) worth of US goods, or a total of 5,140 products, from June 1, retaliating after US moves last week.

“This just got messier and more expensive to the global economy and until we get break here, markets are going to be under pressure,” said Art Hogan, chief market strategist at National Securities in New York.

“Every increase in tariffs is a drag to the global economy and if it drags the economy down, it will drag earnings down, so stocks are going to react to that.”

The S&P 500 on Friday racked up its worst weekly decline since December, as Washington raised tariffs on Chinese goods worth $200 billion to 25 per cent from 10 per cent.

US officials over the weekend sought promises of concrete changes to Chinese law and Beijing said it would not swallow any “bitter fruit” that harmed its interests.

The tensions reverberated through global financial markets, with the yield curve between three-month US Treasury bills and 10-year notes inverting for the second time in less than a week on Monday.

An inversion in the yield curve is seen as a classic signal that a recession is coming.

US equities hit record highs just two weeks ago on hopes of a trade deal and a positive first-quarter earnings season.

The S&P 500 closed on Friday at about 2.2 per cent below its all-time high close.

As the trade dispute extends, investors expect tariffs to increase corporate costs, lower profit margins and hinder the ability of companies to plan or make capital expenditures.

Tariff-sensitive Boeing Co declined 3.6 per cent and Caterpillar Inc dipped 4.0 per cent.

Micron Technology Inc, Intel Corp and Qualcomm Inc fell between 2.9 per cent and 4.2 per cent. The Philadelphia chip index ended last week down about 6 per cent, slashing its year-to-date gain to 28 per cent.

At 8.44am (Eastern Time), Dow e-minis were down 495 points, or 1.91 per cent. S&P 500 e-minis were down 56 points, or 1.94 per cent and Nasdaq 100 e-minis were down 195.75 points, or 2.57 per cent.

Uber Technologies Inc was down 6.0 per cent, after ending down 7.6 per cent on Friday in its first day of trading as a public company in the most anticipated listing since Facebook Inc.