Wall Street slips on rising U.S.-China tensions, recovery worries

By Ambar Warrick and Medha Singh (Reuters) - Wall Street's main indexes eased on Thursday from more than two-month highs hit in the previous session, as growing Sino-U.S. tensions and concerns about a rebound from a coronavirus-led economic slump hit sentiment.

Reuters May 22, 2020 01:06:24 IST
Wall Street slips on rising U.S.-China tensions, recovery worries

Wall Street slips on rising USChina tensions recovery worries

By Ambar Warrick and Medha Singh

(Reuters) - Wall Street's main indexes eased on Thursday from more than two-month highs hit in the previous session, as growing Sino-U.S. tensions and concerns about a rebound from a coronavirus -led economic slump hit sentiment.

President Donald Trump said the United States would react strongly if China imposes national security laws for Hong Kong in response to last year's often violent pro-democracy protests.

Earlier U.S. Secretary of State Mike Pompeo had criticized Beijing's handling of the virus outbreak, while a Chinese official said the country will not flinch from any escalation in tensions.

The souring relations between the world's two largest economies over the outbreak has made investors nervous about the Phase 1 trade deal signed earlier this year and stalled a strong rally in Wall Street's main indexes this month.

Meanwhile, Wall Street's fear gauge <.VIX> rose 30 points for a brief time during the session.

"There are a lot of things the markets are trying to work their way through - the virus, the vaccine and on top of it, now trade issues," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

Analysts said investors were watching for the S&P 500 to cross 3,000 points, a key level that could bolster risk appetite. The benchmark index was also nearing its 100-day and 200-day moving averages, technical indicators that have acted as resistance levels.

"We're just capped in a trading range here, and we've probably reached that high level, and that's why risk is off today," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

At 13:19 p.m. ET, the Dow Jones Industrial Average <.DJI> was down 0.26%, at 24,513.06, the S&P 500 <.SPX> fell 0.56%, at 2,954.85. The Nasdaq Composite <.IXIC> dropped 0.64%, at 9,315.78.

Ten of the 11 major S&P sectors were lower with technology stocks <.SPLRCT> weighing the most. The NYSE FANG+ index <.NYFANG>, which consists of the FAANG stocks and five other major technology stocks, fell 0.6% after coming within a percent of record-high levels.

Best Buy Co Inc fell 4.2% as the electronics retailer reported a 5.3% drop in quarterly same-store sales due to the virus, while L Brands Inc surged 16.7% despite posting worse-than-expected quarterly results.

Discount chain TJX <.TJX> jumped 6.4% to a more than two-month high after it flagged strong sales at its stores that had reopened after lockdowns.

Advancing issues outnumbered decliners by a 1.12-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.05-to-1 ratio on the Nasdaq.

(Reporting by Ambar Warrick and Medha Singh in Bengaluru; Additional reporting by Pawel Goraj in Gdansk; Editing by Sriraj Kalluvila and Arun Koyyur)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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