US close: Stocks head south as Trump reveals more taxes on Chinese imports

US stocks closed lower on Monday, with the Dow Jones reversing its 352-point gain from earlier in the session gain as losses seen last week seemed to be far from over.

At the close, the Dow Jones Industrial Average was 0.99% lower at 24,442.92, while the S&P 500 was down 0.66% at 2,641.25 and the Nasdaq was 1.63% softer at 7,050.29.

The Dow's turnaround was its biggest since February and left it just short of correction territory for the second time in 2018.

Losses picked up after it was revealed that Donald Trump was preparing to impose tariffs on all Chinese imports.

Oanda analyst Craig Erlam said: "I'm still far from confident that we're through the other side of this particular storm and the coming week could be just as turbulent as the ones that preceded it, but a positive start will come as a relief to investors."

"With a week to go until the midterms, more than a quarter of S&P 500 companies reporting and a number of notable data points to come - including the jobs report on Friday and inflation, income and spending today - I don't see this week lacking more volatility."

On the corporate front, shares in software company Red Hat closed 45.41% higher after it agreed to be bought by IBM for $34bn, or $190 per share in cash. Shares in IBM, however, were down 4.13%.

RBC Capital Markets said: "Certainly this is a transformative deal, being the largest in software history, a top ten technology transaction of all time, and a significant boost to IBM's hybrid-cloud business.

"The significant 63% control premium and healthy 9.1x CY/19E and 7.7x CY/20E EV/S multiples indicate to us that Red Hat likely did not need to sell but the offer was very strong. This, along with the approval of the deal by both boards, also likely reduces the chance that another bidder emerges."

Elsewhere, Boeing closed 6.59% lower after one if its 737 aircraft was involved in a fatal crash in Indonesia, marking their worst daily performance since February 2016.

Northrop Grumman shares lost 5.02% after the company announced a $1bn accelerated stock repurchase agreement with Goldman Sachs.

Blue Apron picked up 11.40% throughout the day as the company's meal kits became available on Walmart's Jet.com.

On the macro calendar, the pace of consumer spending in the States picked-up a bit last month, despite the hit to incomes from Hurricane Florence, but price pressures were slightly more intense than anticipated too.

According to the Department of Commerce, personal incomes and spending in the US advanced at a monthly clip of 0.2% and 0.4% in September, respectively.

Economists had forecast gains of 0.4% for both.

However, the August rise in personal incomes was revised up by one-tenth of a percentage point from 0.3% to 0.4%, while the rate of spending for both July and August were revised higher, by one and two-tenths of a percentage point, respectively, to reveal increases of 0.5% for both months.

Elsewhere, Texas factory activity continued to expand in October although at a slower pace than the previous month, according to the monthly Texas Manufacturing Outlook Survey conducted by the Federal Reserve Bank of Dallas.

The production index, a key measure of state manufacturing conditions, fell to 17.6 from 23.3 in September.

Other indexes of manufacturing activity were mixed. The new orders index rose to 18.9 in October from 14.7 while the growth rate of orders index slipped to 11.0 from 11.5, a six-month low. The capacity utilization index dropped to 15.4 from 21.6, while the shipments index fell to 16.6 from 20.8.