Trade-sensitive Boeing, Caterpillar drop premarket as tensions rise

U.S. stock indexes were set to open lower on Monday as the latest round of U.S.-China tariffs took effect, with neither country showing signs of backing down from a protracted trade war.

The markets could be volatile and trading volumes higher as the S&P 500 sector shuffle takes effect, with the telecoms sector reshaped into a "communications services" index to include heavy-hitting technology stocks such as Facebook Inc, Twitter, and Alphabet.

Shares of the three companies were down between 0.7 and 1.2 percent in premarket trading, on renewed fears of higher regulation after a report that the White House has drafted a preliminary order to direct federal agencies to probe the business practices of social media and internet firms.

U.S. tariffs on some $200 billion worth of Chinese goods took effect on Monday, along with Beijing's retaliatory duties on $60 billion worth of U.S. products, which pressured trade-sensitive stocks.

"One of the bigger risks with these tariffs going into effect is that the United States may be pushed out of the Chinese market and it is a growing market," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

"The markets were up pretty strong last week, keeping that in mind and also the news about the trade is enough to contribute to the downward movement," Brown said.

Boeing, the biggest U.S. exporter to China, dropped 0.4 percent and Caterpillar 0.5 percent, leading the losers on the Dow Jones Industrial Average before the bell.

The benchmark S&P 500 and blue-chip Dow Industrials have fared better than the Nasdaq of late, as the latest list of Chinese goods subject to tariffs now includes many technology products.

Network equipment makers Cisco and Netgear were down about 0.5 percent.

At 8:52 a.m. ET, Dow e-minis were down 27 points, or 0.1 percent. S&P 500 e-minis was down 4.75 points, or 0.16 percent and Nasdaq 100 e-minis were down 31.75 points, or 0.42 percent.

Exxon Mobil gained 0.5 percent, the most among the Dow components, as did other energy companies as oil prices jumped after OPEC rebuffed calls by President Donald Trump to raise supply.

Comcast fell 3.7 percent after it won an auction for Britain's Sky Plc, ending a battle with Twenty-First Century Fox and Walt Disney. Fox and Disney were flat.

Symantec rose 5 percent after the Norton anti-virus maker said it would not restate previous results, except for a $13 million transaction, after a four-month-long probe into its accounting practices.

Pandora Media jumped 6.2 percent after satellite radio provider Sirius XM Holdings said it would buy the music streaming service in an all-stock deal valued at about $3.5 billion. Sirius fell 3.4 percent.