May 13, 2019 / 11:34 AM / a year ago

US STOCKS-Futures point to steep losses at open as trade tensions worsen

* Futures down: Dow 1.23%, S&P 1.31%, Nasdaq 1.72%

By Sruthi Shankar

May 13 (Reuters) - U.S. stock index futures pointed to sharp declines at the open on Monday, as a standoff between the United States and China over their prolonged trade dispute heightened fears of a retaliatory war that could push the U.S. economy into recession.

The S&P 500 logged on Friday its worst weekly declines since December after Washington raised tariffs on Chinese good worth $200 billion to 25% from 10% and China vowed to respond after a high-level talk ended with no agreement.

Over the weekend, tensions took a turn for the worse after U.S. officials demanded promises of concrete changes to Chinese law and Beijing said it would not swallow any “bitter fruit” that harmed its interests.

The fears reverberated through the global financial markets, with the yield curve between three-month U.S. Treasury bills and 10-year notes inverting for the second time in under a week. An inversion in the yield curve is seen as a classic signal that a recession is coming.

U.S. equities further pulled back from the record highs hit just two weeks back on hopes of a trade deal and a positive first-quarter earnings season. The S&P 500 was about 2.2% below its all-time high close on Friday.

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.

Among the early decliners were companies with large exposure to China that includes chipmakers, industrial and material companies.

Apple Inc, fell 2.3% in premarket trading. Tariff sensitive Boeing Co declined 1.4% and Caterpillar Inc dipped 1.7%.

Micron Technology Inc, Intel Corp and Qualcomm Inc fell between 1.7% and 2.7%.

The Philadelphia chip index ended last week down about 6%, slashing its year-to-date gain to 28%.

At 7:14 a.m. ET, Dow e-minis were down 320 points, or 1.23 percent. S&P 500 e-minis were down 37.75 points, or 1.31 percent and Nasdaq 100 e-minis were down 130.75 points, or 1.72 percent.

Away from trade issues, Uber Technologies Inc was down 3.9%, after ending down 7.6% on Friday in its first day of trading as a public company in the most anticipated listing since Facebook Inc. (Reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur)

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