Wall Street retreats as trade war fears compound virus woes

(Reuters) – U.S. stocks dropped on Friday as signs of deteriorating trade relations between the United States and China added to economic worries due to the novel coronavirus pandemic.

The Trump administration moved to block semiconductor shipments to China’s Huawei Technologies from global chipmakers. China was swift to respond with a report saying it was ready to put U.S. companies on an “unreliable entity list,” according to the Global Times.

China’s countermeasures include launching investigations and imposing restrictions on U.S. companies such as Apple Inc, Cisco Systems Inc, Qualcomm Inc, as well as suspending purchase of Boeing Co airplanes, the report said, citing a source.

Boeing fell 2.5%, the most among the constituents of the Dow Jones index, while Apple was down 1.4%.

Trade-sensitive chipmakers also declined, with the Philadelphia chip index losing 2.4%.

The ratcheting up of Sino-U.S. tensions comes a day after President Donald Trump signaled a deterioration of his relationship with China over the virus outbreak, saying he has no interest in speaking to President Xi Jinping right now and going so far as to suggest he could even cut ties with Beijing.

“The overarching concern that we’ve had as this epidemic has worked its way around the globe is that U.S.-China relations are heading in the wrong direction and that can cause a worse economic effect than the pandemic itself,” said Art Hogan, chief market strategist at National Securities in New York.

After a strong rally from their 2020 lows, the three major stock indexes are on course for their worst week since mid-March, as sobering comments on the pandemic from major U.S. officials pointed to a longer period of economic weakness.

Meanwhile, economic data continued to paint a grim picture with the latest batch of reports indicating U.S. retail sales and manufacturing output endured record declines in April as the virus-led slump seeped into the second quarter.

At 10:10 a.m. ET, the Dow Jones Industrial Average was down 64.04 points, or 0.27%, at 23,561.30, the S&P 500 was down 9.83 points, or 0.34%, at 2,842.67 and the Nasdaq Composite was down 40.51 points, or 0.45%, at 8,903.21.

Eight of the 11 major S&P sectors were lower with real estate and utilities posting the biggest percentage declines. Healthcare, consumer staples and energy stocks were the only ones higher.

Abbott Laboratories slipped 1.4% after the U.S. Food and Drug Administration said the company’s speedy coronavirus test could potentially be inaccurate, but can still be used to test patients.

Declining issues nearly matched advancers on the NYSE and the Nasdaq.

The S&P index recorded three new 52-week highs and no new low, while the Nasdaq recorded 22 new highs and seven new lows.

Source: Read Full Article