US stock indexes have moved in a flat-to-low range as simmering Sino-US tensions weighed on markets struggling to gauge the pace of economic recovery from the coronavirus.
US President Donald Trump’s rhetoric against China’s plan for a national security law in Hong Kong on Thursday raised concerns over Washington and Beijing reneging on their phase-1 trade deal.
Fears of a renewed trade war have cut short Wall Street’s April rally and indexes are now moving in a tight range, with fresh tariff actions likely to hamper a recovery from the economic shock of the coronavirus.
Andrea Cicione, head of strategy at TS Lombard in London, said sentiment was vulnerable to expensive valuation.
“After the shock of the COVID-19 lockdown, we have to go through a regular recession with high unemployment, low capex, low demand and that’s not what’s priced in at the moment,” she said.
Still, optimism over the US economy gradually emerging from the lockdowns have put the major indexes on course for weekly gains, with the S&P 500 set to add more than two per cent.
At 9.56am local time on Friday, the Dow Jones Industrial Average was down 86.21 points, or 0.35 per cent, at 24,387.91, the S&P 500 was down 4.34 points, or 0.15 per cent, at 2,944.17. The Nasdaq Composite was up 8.51 points, or 0.09 per cent, at 9,293.39.
Ten of the 11 major S&P 500 sub-indexes were trading lower, led by energy as oil prices sank five per cent.
Technology and healthcare shares were the biggest drag on the index.
Real estate stocks were up in some defensive plays, while losses were limited in the consumer staples sector.
Mixed retail earnings from Walmart, Best Buy and Home Depot earlier in the week had shown online shopping gaining traction due to the stay-at-home orders.
On Friday, Chinese e-commerce giant Alibaba reported better-than-expected quarterly profit, but its shares slipped 4.4 per cent.
Smaller rival Pinduoduo’s US-listed shares gained one per cent after posting upbeat earnings report.
Hewlett Packard fell 8.4 per cent after missing second-quarter revenue and profit estimates, hit by global lockdowns since February.
Data analytics software maker Splunk rose 7.7 per cent after saying it expects higher demand for its cloud services as people around the world take to working from home.
Declining issues nearly matched advancers on the NYSE and the Nasdaq.
The S&P index recorded two new 52-week highs and no new low, while the Nasdaq recorded 24 new highs and four new lows.